Correlation Between Tway Air and HLB Power

Can any of the company-specific risk be diversified away by investing in both Tway Air and HLB Power 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 HLB Power 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 HLB Power Co, you can compare the effects of market volatilities on Tway Air and HLB Power 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 HLB Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tway Air and HLB Power.

Diversification Opportunities for Tway Air and HLB Power

0.48

Correlation Coefficient

Tway Air  HLB Power

Very weak diversification

The 3 months correlation between Tway and HLB is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and HLB Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLB Power 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 HLB Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLB Power has no effect on the direction of Tway Air i.e., Tway Air and HLB Power go up and down completely randomly.

Pair Corralation between Tway Air and HLB Power

Assuming the 90 days trading horizon Tway Air Co is expected to generate 0.92 times more return on investment than HLB Power. However, Tway Air Co is 1.09 times less risky than HLB Power. It trades about 0.1 of its potential returns per unit of risk. HLB Power Co is currently generating about -0.13 per unit of risk. If you would invest  332,000  in Tway Air Co on October 26, 2024 and sell it today you would earn a total of  67,000  from holding Tway Air Co or generate 20.18% return on investment over 90 days.

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

Tway Air Co  vs.  HLB Power Co

Tway Air

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tway Air Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tway Air sustained solid returns over the last few months and may actually be approaching a breakup point.

HLB Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HLB Power 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 Tway Air and HLB Power

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

The idea behind Tway Air Co and HLB Power 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.