Correlation Between BGF Retail and Tway Air
Can any of the company-specific risk be diversified away by investing in both BGF Retail and Tway Air 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 BGF Retail and Tway Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BGF Retail Co and Tway Air Co, you can compare the effects of market volatilities on BGF Retail and Tway Air 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 BGF Retail with a short position of Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Retail and Tway Air.
Diversification Opportunities for BGF Retail and Tway Air
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BGF and Tway is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BGF Retail Co and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air and BGF Retail 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 BGF Retail Co are associated (or correlated) with Tway Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tway Air has no effect on the direction of BGF Retail i.e., BGF Retail and Tway Air go up and down completely randomly.
Pair Corralation between BGF Retail and Tway Air
Assuming the 90 days trading horizon BGF Retail Co is expected to under-perform the Tway Air. But the stock apears to be less risky and, when comparing its historical volatility, BGF Retail Co is 1.34 times less risky than Tway Air. The stock trades about -0.12 of its potential returns per unit of risk. The Tway Air Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 308,500 in Tway Air Co on August 25, 2024 and sell it today you would lose (20,500) from holding Tway Air Co or give up 6.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BGF Retail Co vs. Tway Air Co
Performance |
| Timeline |
| BGF Retail |
| Tway Air |
BGF Retail and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BGF Retail and Tway Air
The main advantage of trading using opposite BGF Retail and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Retail position performs unexpectedly, Tway Air 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 Tway Air will offset losses from the drop in Tway Air's long position.| BGF Retail vs. AptaBio Therapeutics | BGF Retail vs. Daewoo SBI SPAC | BGF Retail vs. Dream Security co | BGF Retail vs. Microfriend |
| Tway Air vs. Jin Air Co | Tway Air vs. Busan Industrial Co | Tway Air vs. Busan Ind | Tway Air vs. Mirae Asset Daewoo |
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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