Correlation Between RIWI Corp and GuestLogix

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

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

Diversification Opportunities for RIWI Corp and GuestLogix

0.0

Correlation Coefficient

RIWI Corp  GuestLogix

Pay attention - limited upside

The 3 months correlation between RIWI and GuestLogix is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RIWI Corp and GuestLogix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GuestLogix and RIWI Corp 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 RIWI Corp are associated (or correlated) with GuestLogix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GuestLogix has no effect on the direction of RIWI Corp i.e., RIWI Corp and GuestLogix go up and down completely randomly.

Pair Corralation between RIWI Corp and GuestLogix

Assuming the 90 days horizon RIWI Corp is expected to generate 1.11 times less return on investment than GuestLogix. But when comparing it to its historical volatility, RIWI Corp is 1.56 times less risky than GuestLogix. It trades about 0.04 of its potential returns per unit of risk. GuestLogix is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.02  in GuestLogix on October 26, 2024 and sell it today you would lose (0.01) from holding GuestLogix or give up 50.0% of portfolio value over 90 days.

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

RIWI Corp  vs.  GuestLogix

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.

GuestLogix

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with RIWI Corp and GuestLogix

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

The idea behind RIWI Corp and GuestLogix 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..