Correlation Between Ruentex Engineering and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Ruentex Engineering and Fubon Financial 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 Ruentex Engineering and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruentex Engineering Construction and Fubon Financial Holding, you can compare the effects of market volatilities on Ruentex Engineering and Fubon Financial 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 Ruentex Engineering with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Engineering and Fubon Financial.
Diversification Opportunities for Ruentex Engineering and Fubon Financial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruentex and Fubon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Engineering Constructi and Fubon Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Financial Holding and Ruentex 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 Ruentex Engineering Construction are associated (or correlated) with Fubon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Financial Holding has no effect on the direction of Ruentex Engineering i.e., Ruentex Engineering and Fubon Financial go up and down completely randomly.
Pair Corralation between Ruentex Engineering and Fubon Financial
Assuming the 90 days trading horizon Ruentex Engineering Construction is expected to generate 10.48 times more return on investment than Fubon Financial. However, Ruentex Engineering is 10.48 times more volatile than Fubon Financial Holding. It trades about 0.05 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.02 per unit of risk. If you would invest 11,900 in Ruentex Engineering Construction on October 29, 2024 and sell it today you would earn a total of 3,350 from holding Ruentex Engineering Construction or generate 28.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Engineering Constructi vs. Fubon Financial Holding
Performance |
| Timeline |
| Ruentex Engineering |
| Fubon Financial Holding |
Ruentex Engineering and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Engineering and Fubon Financial
The main advantage of trading using opposite Ruentex Engineering and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Engineering position performs unexpectedly, Fubon Financial 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 Fubon Financial will offset losses from the drop in Fubon Financial's long position.| Ruentex Engineering vs. Ruentex Industries | Ruentex Engineering vs. Huaku Development Co | Ruentex Engineering vs. Ruentex Development Co | Ruentex Engineering vs. Highwealth Construction Corp |
| Fubon Financial vs. U Media Communications | Fubon Financial vs. Ambassador Hotel | Fubon Financial vs. Lian Hwa Foods | Fubon Financial vs. Hi Lai Foods Co |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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