Correlation Between Tway Air and Aprogen KIC

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

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

Diversification Opportunities for Tway Air and Aprogen KIC

-0.09

Correlation Coefficient

Tway Air  Aprogen KIC

Good diversification

The 3 months correlation between Tway and Aprogen is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and Aprogen KIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aprogen KIC and Tway Air 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 Tway Air Co are associated (or correlated) with Aprogen KIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aprogen KIC has no effect on the direction of Tway Air i.e., Tway Air and Aprogen KIC go up and down completely randomly.

Pair Corralation between Tway Air and Aprogen KIC

Assuming the 90 days trading horizon Tway Air Co is expected to generate 1.75 times more return on investment than Aprogen KIC. However, Tway Air is 1.75 times more volatile than Aprogen KIC. It trades about -0.01 of its potential returns per unit of risk. Aprogen KIC is currently generating about -0.02 per unit of risk. If you would invest  250,500  in Tway Air Co on December 24, 2024 and sell it today you would lose (20,000) from holding Tway Air Co or give up 7.98% of portfolio value over 90 days.

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

Tway Air Co  vs.  Aprogen KIC

Tway Air

Risk-Adjusted Performance

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 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.

Aprogen KIC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Tway Air and Aprogen KIC

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

The idea behind Tway Air Co and Aprogen KIC 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.