Correlation Between Great Wall and Ruentex Development
Can any of the company-specific risk be diversified away by investing in both Great Wall and Ruentex Development 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 Great Wall and Ruentex Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Ruentex Development Co, you can compare the effects of market volatilities on Great Wall and Ruentex Development 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 Great Wall with a short position of Ruentex Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Ruentex Development.
Diversification Opportunities for Great Wall and Ruentex Development
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and Ruentex is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Ruentex Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Development has no effect on the direction of Great Wall i.e., Great Wall and Ruentex Development go up and down completely randomly.
Pair Corralation between Great Wall and Ruentex Development
Assuming the 90 days trading horizon Great Wall Enterprise is expected to generate 0.58 times more return on investment than Ruentex Development. However, Great Wall Enterprise is 1.72 times less risky than Ruentex Development. It trades about 0.11 of its potential returns per unit of risk. Ruentex Development Co is currently generating about -0.02 per unit of risk. If you would invest 5,100 in Great Wall Enterprise on September 12, 2024 and sell it today you would earn a total of 250.00 from holding Great Wall Enterprise or generate 4.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Ruentex Development Co
Performance |
| Timeline |
| Great Wall Enterprise |
| Ruentex Development |
Great Wall and Ruentex Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Ruentex Development
The main advantage of trading using opposite Great Wall and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Ruentex Development 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 Ruentex Development will offset losses from the drop in Ruentex Development's long position.| Great Wall vs. Standard Foods Corp | Great Wall vs. Uni President Enterprises Corp | Great Wall vs. Ruentex Development Co | Great Wall vs. WiseChip Semiconductor |
| Ruentex Development vs. Ruentex Industries | Ruentex Development vs. Pou Chen Corp | Ruentex Development vs. Fubon Financial Holding | Ruentex Development vs. Cathay Financial Holding |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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