Correlation Between GiantStep and RaemongRaein

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

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

Diversification Opportunities for GiantStep and RaemongRaein

-0.18

Correlation Coefficient

GiantStep  RaemongRaein

Good diversification

The 3 months correlation between GiantStep and RaemongRaein is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding GiantStep Co and RaemongRaein Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RaemongRaein and GiantStep 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 GiantStep Co are associated (or correlated) with RaemongRaein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RaemongRaein has no effect on the direction of GiantStep i.e., GiantStep and RaemongRaein go up and down completely randomly.

Pair Corralation between GiantStep and RaemongRaein

Assuming the 90 days trading horizon GiantStep Co is expected to under-perform the RaemongRaein. But the stock apears to be less risky and, when comparing its historical volatility, GiantStep Co is 2.24 times less risky than RaemongRaein. The stock trades about -0.03 of its potential returns per unit of risk. The RaemongRaein Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,348,000  in RaemongRaein Co on October 26, 2024 and sell it today you would lose (166,000) from holding RaemongRaein Co or give up 12.31% of portfolio value over 90 days.

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

GiantStep Co  vs.  RaemongRaein Co

GiantStep

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GiantStep Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

RaemongRaein

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RaemongRaein Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RaemongRaein sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GiantStep and RaemongRaein

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

The idea behind GiantStep Co and RaemongRaein 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 Anywhere module to track or share privately all of your investments from the convenience of any device.