Correlation Between Goldsun Building and Ruentex Materials
Can any of the company-specific risk be diversified away by investing in both Goldsun Building 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 Goldsun Building and Ruentex Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldsun Building Materials and Ruentex Materials Co, you can compare the effects of market volatilities on Goldsun Building 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 Goldsun Building with a short position of Ruentex Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldsun Building and Ruentex Materials.
Diversification Opportunities for Goldsun Building and Ruentex Materials
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Goldsun and Ruentex is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Goldsun Building Materials and Ruentex Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Materials and Goldsun Building 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 Goldsun Building Materials 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 Goldsun Building i.e., Goldsun Building and Ruentex Materials go up and down completely randomly.
Pair Corralation between Goldsun Building and Ruentex Materials
Assuming the 90 days trading horizon Goldsun Building Materials is expected to generate 0.99 times more return on investment than Ruentex Materials. However, Goldsun Building Materials is 1.01 times less risky than Ruentex Materials. It trades about 0.09 of its potential returns per unit of risk. Ruentex Materials Co is currently generating about 0.02 per unit of risk. If you would invest 2,560 in Goldsun Building Materials on August 30, 2024 and sell it today you would earn a total of 2,760 from holding Goldsun Building Materials or generate 107.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldsun Building Materials vs. Ruentex Materials Co
Performance |
| Timeline |
| Goldsun Building Mat |
| Ruentex Materials |
Goldsun Building and Ruentex Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldsun Building and Ruentex Materials
The main advantage of trading using opposite Goldsun Building and Ruentex Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldsun Building 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.| Goldsun Building vs. Cathay Real Estate | Goldsun Building vs. Huaku Development Co | Goldsun Building vs. BES Engineering Co | Goldsun Building vs. Prince Housing Development |
| Ruentex Materials vs. Taiwan Cement Corp | Ruentex Materials vs. Asia Cement Corp | Ruentex Materials vs. Goldsun Building Materials | Ruentex Materials vs. Huang Hsiang Construction |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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