Correlation Between Tway Air and Phoenix Materials
Can any of the company-specific risk be diversified away by investing in both Tway Air and Phoenix Materials 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 Phoenix Materials 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 Phoenix Materials Co, you can compare the effects of market volatilities on Tway Air and Phoenix Materials 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 Phoenix Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tway Air and Phoenix Materials.
Diversification Opportunities for Tway Air and Phoenix Materials
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tway and Phoenix is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials 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 Phoenix Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Materials has no effect on the direction of Tway Air i.e., Tway Air and Phoenix Materials go up and down completely randomly.
Pair Corralation between Tway Air and Phoenix Materials
Assuming the 90 days trading horizon Tway Air Co is expected to generate 0.78 times more return on investment than Phoenix Materials. However, Tway Air Co is 1.29 times less risky than Phoenix Materials. It trades about 0.05 of its potential returns per unit of risk. Phoenix Materials Co is currently generating about -0.02 per unit of risk. If you would invest 227,500 in Tway Air Co on August 29, 2024 and sell it today you would earn a total of 79,000 from holding Tway Air Co or generate 34.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tway Air Co vs. Phoenix Materials Co
Performance |
| Timeline |
| Tway Air |
| Phoenix Materials |
Tway Air and Phoenix Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tway Air and Phoenix Materials
The main advantage of trading using opposite Tway Air and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tway Air position performs unexpectedly, Phoenix Materials 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 Phoenix Materials will offset losses from the drop in Phoenix Materials' long position.| Tway Air vs. Busan Industrial Co | Tway Air vs. Busan Ind | Tway Air vs. Mirae Asset Daewoo | Tway Air vs. UNISEM Co |
| Phoenix Materials vs. Namhae Chemical | Phoenix Materials vs. Seoul Electronics Telecom | Phoenix Materials vs. Sunny Electronics Corp | Phoenix Materials vs. Sungwoo Electronics Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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