Correlation Between Tway Air and Jin Air

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

Diversification Opportunities for Tway Air and Jin Air

0.23

Correlation Coefficient

Tway Air  Jin Air

Modest diversification

The 3 months correlation between Tway and Jin is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and Jin Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jin Air 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 Jin Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jin Air has no effect on the direction of Tway Air i.e., Tway Air and Jin Air go up and down completely randomly.

Pair Corralation between Tway Air and Jin Air

Assuming the 90 days trading horizon Tway Air Co is expected to generate 1.7 times more return on investment than Jin Air. However, Tway Air is 1.7 times more volatile than Jin Air Co. It trades about 0.04 of its potential returns per unit of risk. Jin Air Co is currently generating about 0.06 per unit of risk. If you would invest  284,500  in Tway Air Co on August 31, 2024 and sell it today you would earn a total of  16,500  from holding Tway Air Co or generate 5.8% return on investment over 90 days.

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

Tway Air Co  vs.  Jin Air Co

Tway Air

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tway Air Co are ranked lower than 3 (%) 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.

Jin Air

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jin Air Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jin Air may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Tway Air and Jin Air

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

The idea behind Tway Air Co and Jin 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.