Correlation Between TMT Steel and Rayong Wire
Can any of the company-specific risk be diversified away by investing in both TMT Steel 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 TMT Steel and Rayong Wire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMT Steel Public and Rayong Wire Industries, you can compare the effects of market volatilities on TMT Steel 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 TMT Steel with a short position of Rayong Wire. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Steel and Rayong Wire.
Diversification Opportunities for TMT Steel and Rayong Wire
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TMT and Rayong is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding TMT Steel Public 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 TMT Steel 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 TMT Steel Public 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 TMT Steel i.e., TMT Steel and Rayong Wire go up and down completely randomly.
Pair Corralation between TMT Steel and Rayong Wire
Assuming the 90 days trading horizon TMT Steel is expected to generate 1.05 times less return on investment than Rayong Wire. But when comparing it to its historical volatility, TMT Steel Public is 1.0 times less risky than Rayong Wire. It trades about 0.04 of its potential returns per unit of risk. Rayong Wire Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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 |
TMT Steel Public vs. Rayong Wire Industries
Performance |
| Timeline |
| TMT Steel Public |
| Rayong Wire Industries |
TMT Steel and Rayong Wire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMT Steel and Rayong Wire
The main advantage of trading using opposite TMT Steel and Rayong Wire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMT Steel 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.| TMT Steel vs. MCS Steel Public | TMT Steel vs. Thai Vegetable Oil | TMT Steel vs. Pacific Pipe Public | TMT Steel vs. Tipco Foods 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |