Correlation Between Stic Investments and Tway Air

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

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

Diversification Opportunities for Stic Investments and Tway Air

-0.58

Correlation Coefficient

Stic Investments  Tway Air

Excellent diversification

The 3 months correlation between Stic and Tway is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Stic Investments and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air and Stic Investments 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 Stic Investments 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 Stic Investments i.e., Stic Investments and Tway Air go up and down completely randomly.

Pair Corralation between Stic Investments and Tway Air

Assuming the 90 days trading horizon Stic Investments is expected to under-perform the Tway Air. But the stock apears to be less risky and, when comparing its historical volatility, Stic Investments is 1.94 times less risky than Tway Air. The stock trades about -0.24 of its potential returns per unit of risk. The Tway Air Co is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  252,000  in Tway Air Co on October 22, 2024 and sell it today you would earn a total of  45,000  from holding Tway Air Co or generate 17.86% return on investment over 90 days.

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

Stic Investments  vs.  Tway Air Co

Stic Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stic Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Stic Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tway Air

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tway Air Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tway Air is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stic Investments and Tway Air

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

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.