Correlation Between BES Engineering and Ruentex Development
Can any of the company-specific risk be diversified away by investing in both BES Engineering 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 BES Engineering and Ruentex Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BES Engineering Co and Ruentex Development Co, you can compare the effects of market volatilities on BES Engineering 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 BES Engineering with a short position of Ruentex Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of BES Engineering and Ruentex Development.
Diversification Opportunities for BES Engineering and Ruentex Development
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BES and Ruentex is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BES Engineering Co and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development and BES Engineering 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 BES Engineering Co 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 BES Engineering i.e., BES Engineering and Ruentex Development go up and down completely randomly.
Pair Corralation between BES Engineering and Ruentex Development
Assuming the 90 days trading horizon BES Engineering Co is expected to generate 1.08 times more return on investment than Ruentex Development. However, BES Engineering is 1.08 times more volatile than Ruentex Development Co. It trades about -0.05 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 1,090 in BES Engineering Co on September 22, 2024 and sell it today you would lose (15.00) from holding BES Engineering Co or give up 1.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BES Engineering Co vs. Ruentex Development Co
Performance |
| Timeline |
| BES Engineering |
| Ruentex Development |
BES Engineering and Ruentex Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BES Engineering and Ruentex Development
The main advantage of trading using opposite BES Engineering and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BES Engineering 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.| BES Engineering vs. Yang Ming Marine | BES Engineering vs. Evergreen Marine Corp | BES Engineering vs. Eva Airways Corp | BES Engineering vs. U Ming Marine Transport |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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