Correlation Between Hung Sheng and Ruentex Development
Can any of the company-specific risk be diversified away by investing in both Hung Sheng 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 Hung Sheng and Ruentex Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hung Sheng Construction and Ruentex Development Co, you can compare the effects of market volatilities on Hung Sheng 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 Hung Sheng with a short position of Ruentex Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Ruentex Development.
Diversification Opportunities for Hung Sheng and Ruentex Development
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hung and Ruentex is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development and Hung Sheng 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 Hung Sheng Construction 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 Hung Sheng i.e., Hung Sheng and Ruentex Development go up and down completely randomly.
Pair Corralation between Hung Sheng and Ruentex Development
Assuming the 90 days trading horizon Hung Sheng is expected to generate 7.1 times less return on investment than Ruentex Development. But when comparing it to its historical volatility, Hung Sheng Construction is 1.04 times less risky than Ruentex Development. It trades about 0.0 of its potential returns per unit of risk. Ruentex Development Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,470 in Ruentex Development Co on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Ruentex Development Co or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. Ruentex Development Co
Performance |
| Timeline |
| Hung Sheng Construction |
| Ruentex Development |
Hung Sheng and Ruentex Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Ruentex Development
The main advantage of trading using opposite Hung Sheng and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng 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.| Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. CTCI Corp | Hung Sheng vs. Information Technology Total | Hung Sheng vs. Ennoconn Corp |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |