Correlation Between GA EXpress and RIWI Corp

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

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

Diversification Opportunities for GA EXpress and RIWI Corp

0.54

Correlation Coefficient

GA EXpress  RIWI Corp

Very weak diversification

The 3 months correlation between GAEX and RIWI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding GA eXpress and RIWI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RIWI Corp and GA EXpress 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 GA eXpress are associated (or correlated) with RIWI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RIWI Corp has no effect on the direction of GA EXpress i.e., GA EXpress and RIWI Corp go up and down completely randomly.

Pair Corralation between GA EXpress and RIWI Corp

Given the investment horizon of 90 days GA eXpress is expected to under-perform the RIWI Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, GA eXpress is 1.47 times less risky than RIWI Corp. The pink sheet trades about -0.04 of its potential returns per unit of risk. The RIWI Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  43.00  in RIWI Corp on October 26, 2024 and sell it today you would earn a total of  12.00  from holding RIWI Corp or generate 27.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

GA eXpress  vs.  RIWI Corp

GA eXpress

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GA eXpress has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

RIWI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RIWI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RIWI Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GA EXpress and RIWI Corp

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

The idea behind GA eXpress and RIWI Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.