Correlation Between Long Bon and Ruentex Development
Can any of the company-specific risk be diversified away by investing in both Long Bon 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 Long Bon and Ruentex Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Long Bon International and Ruentex Development Co, you can compare the effects of market volatilities on Long Bon 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 Long Bon with a short position of Ruentex Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Bon and Ruentex Development.
Diversification Opportunities for Long Bon and Ruentex Development
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Long and Ruentex is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Long Bon International and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development and Long Bon 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 Long Bon International 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 Long Bon i.e., Long Bon and Ruentex Development go up and down completely randomly.
Pair Corralation between Long Bon and Ruentex Development
Assuming the 90 days trading horizon Long Bon International is expected to generate 0.87 times more return on investment than Ruentex Development. However, Long Bon International is 1.15 times less risky than Ruentex Development. It trades about -0.3 of its potential returns per unit of risk. Ruentex Development Co is currently generating about -0.35 per unit of risk. If you would invest 2,115 in Long Bon International on September 22, 2024 and sell it today you would lose (140.00) from holding Long Bon International or give up 6.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Long Bon International vs. Ruentex Development Co
Performance |
| Timeline |
| Long Bon International |
| Ruentex Development |
Long Bon and Ruentex Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long Bon and Ruentex Development
The main advantage of trading using opposite Long Bon and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long Bon 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.| Long Bon vs. Hung Sheng Construction | Long Bon vs. Chainqui Construction Development | Long Bon vs. BES Engineering Co | Long Bon vs. Sincere Navigation Corp |
| Ruentex Development vs. Hung Sheng Construction | Ruentex Development vs. Chainqui Construction Development | Ruentex Development vs. BES Engineering Co | Ruentex Development vs. Long Bon International |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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