Correlation Between Tway Air and KCC Engineering
Can any of the company-specific risk be diversified away by investing in both Tway Air and KCC Engineering 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 KCC Engineering 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 KCC Engineering Construction, you can compare the effects of market volatilities on Tway Air and KCC Engineering 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 KCC Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tway Air and KCC Engineering.
Diversification Opportunities for Tway Air and KCC Engineering
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tway and KCC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and KCC Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCC Engineering Cons 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 KCC Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCC Engineering Cons has no effect on the direction of Tway Air i.e., Tway Air and KCC Engineering go up and down completely randomly.
Pair Corralation between Tway Air and KCC Engineering
Assuming the 90 days trading horizon Tway Air Co is expected to generate 8.48 times more return on investment than KCC Engineering. However, Tway Air is 8.48 times more volatile than KCC Engineering Construction. It trades about 0.44 of its potential returns per unit of risk. KCC Engineering Construction is currently generating about -0.52 per unit of risk. If you would invest 275,500 in Tway Air Co on November 5, 2024 and sell it today you would earn a total of 114,500 from holding Tway Air Co or generate 41.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tway Air Co vs. KCC Engineering Construction
Performance |
| Timeline |
| Tway Air |
| KCC Engineering Cons |
Tway Air and KCC Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tway Air and KCC Engineering
The main advantage of trading using opposite Tway Air and KCC Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tway Air position performs unexpectedly, KCC Engineering 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 KCC Engineering will offset losses from the drop in KCC Engineering's long position.The idea behind Tway Air Co and KCC Engineering Construction pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| KCC Engineering vs. Samsung Card Co | KCC Engineering vs. EBEST Investment Securities | KCC Engineering vs. Koh Young Technology | KCC Engineering vs. Hansol Chemica |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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