Correlation Between Tway Air and Jeong Moon
Can any of the company-specific risk be diversified away by investing in both Tway Air and Jeong Moon 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 Jeong Moon 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 Jeong Moon Information, you can compare the effects of market volatilities on Tway Air and Jeong Moon 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 Jeong Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tway Air and Jeong Moon.
Diversification Opportunities for Tway Air and Jeong Moon
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tway and Jeong is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and Jeong Moon Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeong Moon Information 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 Jeong Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeong Moon Information has no effect on the direction of Tway Air i.e., Tway Air and Jeong Moon go up and down completely randomly.
Pair Corralation between Tway Air and Jeong Moon
Assuming the 90 days trading horizon Tway Air Co is expected to generate 1.54 times more return on investment than Jeong Moon. However, Tway Air is 1.54 times more volatile than Jeong Moon Information. It trades about 0.02 of its potential returns per unit of risk. Jeong Moon Information is currently generating about -0.03 per unit of risk. If you would invest 239,000 in Tway Air Co on September 13, 2024 and sell it today you would earn a total of 24,000 from holding Tway Air Co or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tway Air Co vs. Jeong Moon Information
Performance |
| Timeline |
| Tway Air |
| Jeong Moon Information |
Tway Air and Jeong Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tway Air and Jeong Moon
The main advantage of trading using opposite Tway Air and Jeong Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tway Air position performs unexpectedly, Jeong Moon 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 Jeong Moon will offset losses from the drop in Jeong Moon's long position.| Tway Air vs. Seoyon Topmetal Co | Tway Air vs. MetaLabs Co | Tway Air vs. DataSolution | Tway Air vs. Moadata Co |
| Jeong Moon vs. Cube Entertainment | Jeong Moon vs. Dreamus Company | Jeong Moon vs. LG Energy Solution | Jeong Moon vs. Dongwon System |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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