Correlation Between Tway Air and Wonbang Tech
Can any of the company-specific risk be diversified away by investing in both Tway Air and Wonbang Tech 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 Wonbang Tech 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 Wonbang Tech Co, you can compare the effects of market volatilities on Tway Air and Wonbang Tech 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 Wonbang Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tway Air and Wonbang Tech.
Diversification Opportunities for Tway Air and Wonbang Tech
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tway and Wonbang is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and Wonbang Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonbang Tech 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 Wonbang Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonbang Tech has no effect on the direction of Tway Air i.e., Tway Air and Wonbang Tech go up and down completely randomly.
Pair Corralation between Tway Air and Wonbang Tech
Assuming the 90 days trading horizon Tway Air is expected to generate 2.15 times less return on investment than Wonbang Tech. In addition to that, Tway Air is 1.12 times more volatile than Wonbang Tech Co. It trades about 0.09 of its total potential returns per unit of risk. Wonbang Tech Co is currently generating about 0.23 per unit of volatility. If you would invest 1,290,000 in Wonbang Tech Co on October 17, 2024 and sell it today you would earn a total of 140,000 from holding Wonbang Tech Co or generate 10.85% 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. Wonbang Tech Co
Performance |
| Timeline |
| Tway Air |
| Wonbang Tech |
Tway Air and Wonbang Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tway Air and Wonbang Tech
The main advantage of trading using opposite Tway Air and Wonbang Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tway Air position performs unexpectedly, Wonbang Tech 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 Wonbang Tech will offset losses from the drop in Wonbang Tech's long position.| Tway Air vs. LG Chemicals | Tway Air vs. KPX Green Chemical | Tway Air vs. Dongnam Chemical Co | Tway Air vs. Kukdong Oil Chemicals |
| Wonbang Tech vs. JC Chemical Co | Wonbang Tech vs. Tway Air Co | Wonbang Tech vs. Daejung Chemicals Metals | Wonbang Tech vs. Air Busan 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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