Correlation Between Tae Kwang and Taewoong CoLtd

Can any of the company-specific risk be diversified away by investing in both Tae Kwang and Taewoong CoLtd 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 Tae Kwang and Taewoong CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tae Kwang and Taewoong CoLtd, you can compare the effects of market volatilities on Tae Kwang and Taewoong CoLtd 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 Tae Kwang with a short position of Taewoong CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kwang and Taewoong CoLtd.

Diversification Opportunities for Tae Kwang and Taewoong CoLtd

-0.61

Correlation Coefficient

Tae Kwang  Taewoong CoLtd

Excellent diversification

The 3 months correlation between Tae and Taewoong is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kwang and Taewoong CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong CoLtd and Tae Kwang 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 Tae Kwang are associated (or correlated) with Taewoong CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong CoLtd has no effect on the direction of Tae Kwang i.e., Tae Kwang and Taewoong CoLtd go up and down completely randomly.

Pair Corralation between Tae Kwang and Taewoong CoLtd

Assuming the 90 days trading horizon Tae Kwang is expected to generate 0.84 times more return on investment than Taewoong CoLtd. However, Tae Kwang is 1.19 times less risky than Taewoong CoLtd. It trades about 0.03 of its potential returns per unit of risk. Taewoong CoLtd is currently generating about 0.03 per unit of risk. If you would invest  1,450,576  in Tae Kwang on October 12, 2024 and sell it today you would earn a total of  370,424  from holding Tae Kwang or generate 25.54% return on investment over 90 days.

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

Tae Kwang  vs.  Taewoong CoLtd

Tae Kwang

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tae Kwang are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tae Kwang sustained solid returns over the last few months and may actually be approaching a breakup point.

Taewoong CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taewoong CoLtd 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 Tae Kwang and Taewoong CoLtd

The main advantage of trading using opposite Tae Kwang and Taewoong CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tae Kwang position performs unexpectedly, Taewoong CoLtd 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 Taewoong CoLtd will offset losses from the drop in Taewoong CoLtd's long position.

The idea behind Tae Kwang and Taewoong CoLtd 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.