Correlation Between Tway Air and Seohee Construction
Can any of the company-specific risk be diversified away by investing in both Tway Air and Seohee Construction 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 Seohee Construction 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 Seohee Construction Co, you can compare the effects of market volatilities on Tway Air and Seohee Construction 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 Seohee Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tway Air and Seohee Construction.
Diversification Opportunities for Tway Air and Seohee Construction
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tway and Seohee is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and Seohee Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seohee Construction 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 Seohee Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seohee Construction has no effect on the direction of Tway Air i.e., Tway Air and Seohee Construction go up and down completely randomly.
Pair Corralation between Tway Air and Seohee Construction
Assuming the 90 days trading horizon Tway Air Co is expected to generate 1.88 times more return on investment than Seohee Construction. However, Tway Air is 1.88 times more volatile than Seohee Construction Co. It trades about 0.04 of its potential returns per unit of risk. Seohee Construction Co is currently generating about 0.03 per unit of risk. If you would invest 191,500 in Tway Air Co on August 23, 2024 and sell it today you would earn a total of 96,000 from holding Tway Air Co or generate 50.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tway Air Co vs. Seohee Construction Co
Performance |
| Timeline |
| Tway Air |
| Seohee Construction |
Tway Air and Seohee Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tway Air and Seohee Construction
The main advantage of trading using opposite Tway Air and Seohee Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tway Air position performs unexpectedly, Seohee Construction 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 Seohee Construction will offset losses from the drop in Seohee Construction's long position.| Tway Air vs. Organic Special Pet | Tway Air vs. Hyundai Green Food | Tway Air vs. Samlip General Foods | Tway Air vs. Sam Yang Foods |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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