Correlation Between Samwha Electronics and Tway Air

Can any of the company-specific risk be diversified away by investing in both Samwha Electronics 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 Samwha Electronics and Tway Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samwha Electronics Co and Tway Air Co, you can compare the effects of market volatilities on Samwha Electronics 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 Samwha Electronics with a short position of Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samwha Electronics and Tway Air.

Diversification Opportunities for Samwha Electronics and Tway Air

-0.3

Correlation Coefficient

Samwha Electronics  Tway Air

Very good diversification

The 3 months correlation between Samwha and Tway is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Samwha Electronics 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 Samwha Electronics 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 Samwha Electronics 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 Samwha Electronics i.e., Samwha Electronics and Tway Air go up and down completely randomly.

Pair Corralation between Samwha Electronics and Tway Air

Assuming the 90 days trading horizon Samwha Electronics Co is expected to generate 1.4 times more return on investment than Tway Air. However, Samwha Electronics is 1.4 times more volatile than Tway Air Co. It trades about 0.04 of its potential returns per unit of risk. Tway Air Co is currently generating about -0.08 per unit of risk. If you would invest  325,000  in Samwha Electronics Co on October 11, 2024 and sell it today you would earn a total of  12,000  from holding Samwha Electronics Co or generate 3.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Samwha Electronics Co  vs.  Tway Air Co

Samwha Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samwha Electronics Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samwha Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tway Air

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tway Air Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Samwha Electronics and Tway Air

The main advantage of trading using opposite Samwha Electronics and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samwha Electronics 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.

The idea behind Samwha Electronics Co and Tway Air Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.