Correlation Between Tway Air and Hyundai Rotem
Can any of the company-specific risk be diversified away by investing in both Tway Air and Hyundai Rotem 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 Hyundai Rotem 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 Hyundai Rotem Co, you can compare the effects of market volatilities on Tway Air and Hyundai Rotem 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 Hyundai Rotem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tway Air and Hyundai Rotem.
Diversification Opportunities for Tway Air and Hyundai Rotem
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tway and Hyundai is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and Hyundai Rotem Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Rotem 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 Hyundai Rotem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Rotem has no effect on the direction of Tway Air i.e., Tway Air and Hyundai Rotem go up and down completely randomly.
Pair Corralation between Tway Air and Hyundai Rotem
Assuming the 90 days trading horizon Tway Air Co is expected to generate 1.43 times more return on investment than Hyundai Rotem. However, Tway Air is 1.43 times more volatile than Hyundai Rotem Co. It trades about 0.49 of its potential returns per unit of risk. Hyundai Rotem Co is currently generating about 0.28 per unit of risk. If you would invest 252,000 in Tway Air Co on October 24, 2024 and sell it today you would earn a total of 84,000 from holding Tway Air Co or generate 33.33% 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. Hyundai Rotem Co
Performance |
| Timeline |
| Tway Air |
| Hyundai Rotem |
Tway Air and Hyundai Rotem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tway Air and Hyundai Rotem
The main advantage of trading using opposite Tway Air and Hyundai Rotem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tway Air position performs unexpectedly, Hyundai Rotem 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 Hyundai Rotem will offset losses from the drop in Hyundai Rotem's long position.| Tway Air vs. Solus Advanced Materials | Tway Air vs. Seoyon Topmetal Co | Tway Air vs. LAKE MATERIALS LTD | Tway Air vs. Union Materials Corp |
| Hyundai Rotem vs. Top Material Co | Hyundai Rotem vs. Samyung Trading Co | Hyundai Rotem vs. Hana Materials | Hyundai Rotem vs. Hyosung Advanced Materials |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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