Correlation Between Tway Air and Kaonmedia

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

Diversification Opportunities for Tway Air and Kaonmedia

0.02

Correlation Coefficient

Tway Air  Kaonmedia

Significant diversification

The 3 months correlation between Tway and Kaonmedia is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and Kaonmedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaonmedia 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 Kaonmedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaonmedia has no effect on the direction of Tway Air i.e., Tway Air and Kaonmedia go up and down completely randomly.

Pair Corralation between Tway Air and Kaonmedia

Assuming the 90 days trading horizon Tway Air Co is expected to under-perform the Kaonmedia. In addition to that, Tway Air is 2.34 times more volatile than Kaonmedia Co. It trades about -0.01 of its total potential returns per unit of risk. Kaonmedia Co is currently generating about 0.03 per unit of volatility. If you would invest  291,667  in Kaonmedia Co on December 25, 2024 and sell it today you would earn a total of  5,833  from holding Kaonmedia Co or generate 2.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Tway Air Co  vs.  Kaonmedia Co

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.

Kaonmedia

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kaonmedia Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kaonmedia 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 Kaonmedia

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

The idea behind Tway Air Co and Kaonmedia 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.