Correlation Between DONGKUK TED and Tway Air
Can any of the company-specific risk be diversified away by investing in both DONGKUK TED 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 DONGKUK TED and Tway Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DONGKUK TED METAL and Tway Air Co, you can compare the effects of market volatilities on DONGKUK TED 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 DONGKUK TED with a short position of Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of DONGKUK TED and Tway Air.
Diversification Opportunities for DONGKUK TED and Tway Air
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DONGKUK and Tway is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding DONGKUK TED METAL and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air and DONGKUK TED 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 DONGKUK TED METAL 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 DONGKUK TED i.e., DONGKUK TED and Tway Air go up and down completely randomly.
Pair Corralation between DONGKUK TED and Tway Air
Assuming the 90 days trading horizon DONGKUK TED is expected to generate 6.19 times less return on investment than Tway Air. But when comparing it to its historical volatility, DONGKUK TED METAL is 2.43 times less risky than Tway Air. It trades about 0.09 of its potential returns per unit of risk. Tway Air Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 294,500 in Tway Air Co on October 30, 2024 and sell it today you would earn a total of 116,500 from holding Tway Air Co or generate 39.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DONGKUK TED METAL vs. Tway Air Co
Performance |
| Timeline |
| DONGKUK TED METAL |
| Tway Air |
DONGKUK TED and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DONGKUK TED and Tway Air
The main advantage of trading using opposite DONGKUK TED and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DONGKUK TED 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.| DONGKUK TED vs. Nice Information Telecommunication | DONGKUK TED vs. Kukil Metal Co | DONGKUK TED vs. Dongbang Transport Logistics | DONGKUK TED vs. GS Retail Co |
| Tway Air vs. Namhae Chemical | Tway Air vs. Lotte Non Life Insurance | Tway Air vs. KPX Green Chemical | Tway Air vs. Youngchang Chemical 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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