Correlation Between Hotai and Ruentex Materials
Can any of the company-specific risk be diversified away by investing in both Hotai and Ruentex Materials 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 Hotai and Ruentex Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hotai Motor Co and Ruentex Materials Co, you can compare the effects of market volatilities on Hotai and Ruentex Materials 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 Hotai with a short position of Ruentex Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotai and Ruentex Materials.
Diversification Opportunities for Hotai and Ruentex Materials
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hotai and Ruentex is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hotai Motor Co and Ruentex Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Materials and Hotai 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 Hotai Motor Co are associated (or correlated) with Ruentex Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Materials has no effect on the direction of Hotai i.e., Hotai and Ruentex Materials go up and down completely randomly.
Pair Corralation between Hotai and Ruentex Materials
Assuming the 90 days trading horizon Hotai Motor Co is expected to under-perform the Ruentex Materials. In addition to that, Hotai is 1.0 times more volatile than Ruentex Materials Co. It trades about -0.17 of its total potential returns per unit of risk. Ruentex Materials Co is currently generating about -0.12 per unit of volatility. If you would invest 2,710 in Ruentex Materials Co on September 1, 2024 and sell it today you would lose (100.00) from holding Ruentex Materials Co or give up 3.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hotai Motor Co vs. Ruentex Materials Co
Performance |
| Timeline |
| Hotai Motor |
| Ruentex Materials |
Hotai and Ruentex Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hotai and Ruentex Materials
The main advantage of trading using opposite Hotai and Ruentex Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotai position performs unexpectedly, Ruentex Materials 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 Materials will offset losses from the drop in Ruentex Materials' long position.| Hotai vs. President Chain Store | Hotai vs. Formosa Petrochemical Corp | Hotai vs. Cheng Shin Rubber | Hotai vs. Formosa Chemicals Fibre |
| Ruentex Materials vs. Taiwan Cement Corp | Ruentex Materials vs. Asia Cement Corp | Ruentex Materials vs. Goldsun Building Materials | Ruentex Materials vs. Universal Cement Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |