Correlation Between Rayong Wire and G J

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

By analyzing existing cross correlation between Rayong Wire Industries and G J Steel, you can compare the effects of market volatilities on Rayong Wire and G J 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 Rayong Wire with a short position of G J. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rayong Wire and G J.

Diversification Opportunities for Rayong Wire and G J

0.67

Correlation Coefficient

Rayong Wire  G J

Poor diversification

The 3 months correlation between Rayong and GJS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Rayong Wire Industries and G J Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G J Steel and Rayong Wire 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 Rayong Wire Industries are associated (or correlated) with G J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G J Steel has no effect on the direction of Rayong Wire i.e., Rayong Wire and G J go up and down completely randomly.

Pair Corralation between Rayong Wire and G J

Assuming the 90 days trading horizon Rayong Wire Industries is expected to under-perform the G J. But the stock apears to be less risky and, when comparing its historical volatility, Rayong Wire Industries is 1.82 times less risky than G J. The stock trades about -0.16 of its potential returns per unit of risk. The G J Steel is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  15.00  in G J Steel on December 19, 2024 and sell it today you would lose (1.00) from holding G J Steel or give up 6.67% of portfolio value over 90 days.

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

Rayong Wire Industries  vs.  G J Steel

Rayong Wire Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rayong Wire Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

G J Steel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in G J Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, G J may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Rayong Wire and G J

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

The idea behind Rayong Wire Industries and G J Steel 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.