Correlation Between Taewoong Logistics and Korea Line

Can any of the company-specific risk be diversified away by investing in both Taewoong Logistics and Korea Line 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 Taewoong Logistics and Korea Line into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Taewoong Logistics CoLtd and Korea Line, you can compare the effects of market volatilities on Taewoong Logistics and Korea Line 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 Taewoong Logistics with a short position of Korea Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taewoong Logistics and Korea Line.

Diversification Opportunities for Taewoong Logistics and Korea Line

0.59

Correlation Coefficient

Taewoong Logistics  Korea Line

Very weak diversification

The 3 months correlation between Taewoong and Korea is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Taewoong Logistics CoLtd and Korea Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Line and Taewoong Logistics 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 Taewoong Logistics CoLtd are associated (or correlated) with Korea Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Line has no effect on the direction of Taewoong Logistics i.e., Taewoong Logistics and Korea Line go up and down completely randomly.

Pair Corralation between Taewoong Logistics and Korea Line

Assuming the 90 days trading horizon Taewoong Logistics CoLtd is expected to generate 1.0 times more return on investment than Korea Line. However, Taewoong Logistics is 1.0 times more volatile than Korea Line. It trades about 0.05 of its potential returns per unit of risk. Korea Line is currently generating about -0.04 per unit of risk. If you would invest  280,143  in Taewoong Logistics CoLtd on December 4, 2024 and sell it today you would earn a total of  13,357  from holding Taewoong Logistics CoLtd or generate 4.77% return on investment over 90 days.

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

Taewoong Logistics CoLtd  vs.  Korea Line

Taewoong Logistics CoLtd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taewoong Logistics CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Taewoong Logistics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Korea Line

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Taewoong Logistics and Korea Line

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

The idea behind Taewoong Logistics CoLtd and Korea Line 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..