Correlation Between Tway Air and Dongwon System
Can any of the company-specific risk be diversified away by investing in both Tway Air and Dongwon System at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tway Air and Dongwon System into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tway Air Co and Dongwon System, you can compare the effects of market volatilities on Tway Air and Dongwon System and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tway Air with a short position of Dongwon System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tway Air and Dongwon System.
Diversification Opportunities for Tway Air and Dongwon System
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tway and Dongwon is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and Dongwon System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon System and Tway Air is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tway Air Co are associated (or correlated) with Dongwon System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon System has no effect on the direction of Tway Air i.e., Tway Air and Dongwon System go up and down completely randomly.
Pair Corralation between Tway Air and Dongwon System
Assuming the 90 days trading horizon Tway Air Co is expected to under-perform the Dongwon System. In addition to that, Tway Air is 1.02 times more volatile than Dongwon System. It trades about 0.0 of its total potential returns per unit of risk. Dongwon System is currently generating about 0.01 per unit of volatility. If you would invest 4,207,365 in Dongwon System on September 25, 2024 and sell it today you would lose (132,365) from holding Dongwon System or give up 3.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tway Air Co vs. Dongwon System
Performance |
| Timeline |
| Tway Air |
| Dongwon System |
Tway Air and Dongwon System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tway Air and Dongwon System
The main advantage of trading using opposite Tway Air and Dongwon System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tway Air position performs unexpectedly, Dongwon System can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dongwon System will offset losses from the drop in Dongwon System's long position.| Tway Air vs. Korean Drug Co | Tway Air vs. KTB Investment Securities | Tway Air vs. DSC Investment | Tway Air vs. NH Investment Securities |
| Dongwon System vs. Daejoo Electronic Materials | Dongwon System vs. Hyundai Engineering Plastics | Dongwon System vs. Samsung Publishing Co | Dongwon System vs. Nable Communications |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |