Correlation Between G J and Rayong Wire
Can any of the company-specific risk be diversified away by investing in both G J and Rayong Wire 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 G J and Rayong Wire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G J Steel and Rayong Wire Industries, you can compare the effects of market volatilities on G J and Rayong Wire 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 G J with a short position of Rayong Wire. Check out your portfolio center. Please also check ongoing floating volatility patterns of G J and Rayong Wire.
Diversification Opportunities for G J and Rayong Wire
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GJS and Rayong is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding G J Steel and Rayong Wire Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayong Wire Industries and G J 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 G J Steel are associated (or correlated) with Rayong Wire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayong Wire Industries has no effect on the direction of G J i.e., G J and Rayong Wire go up and down completely randomly.
Pair Corralation between G J and Rayong Wire
Assuming the 90 days trading horizon G J is expected to generate 1.02 times less return on investment than Rayong Wire. In addition to that, G J is 1.0 times more volatile than Rayong Wire Industries. It trades about 0.04 of its total potential returns per unit of risk. Rayong Wire Industries is currently generating about 0.04 per unit of volatility. If you would invest 90.00 in Rayong Wire Industries on October 11, 2024 and sell it today you would lose (43.00) from holding Rayong Wire Industries or give up 47.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
G J Steel vs. Rayong Wire Industries
Performance |
| Timeline |
| G J Steel |
| Rayong Wire Industries |
G J and Rayong Wire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G J and Rayong Wire
The main advantage of trading using opposite G J and Rayong Wire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G J position performs unexpectedly, Rayong Wire 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 Rayong Wire will offset losses from the drop in Rayong Wire's long position.| G J vs. POSCO Thainox Public | G J vs. Aqua Public | G J vs. Better World Green | G J vs. Eternal Energy Public |
| Rayong Wire vs. Tata Steel Public | Rayong Wire vs. G J Steel | Rayong Wire vs. POSCO Thainox Public | Rayong Wire vs. TMT Steel Public |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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