Correlation Between Ruentex Engineering and Lihtai Construction
Can any of the company-specific risk be diversified away by investing in both Ruentex Engineering and Lihtai Construction 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 Lihtai Construction 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 Lihtai Construction Enterprise, you can compare the effects of market volatilities on Ruentex Engineering and Lihtai Construction 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 Lihtai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Engineering and Lihtai Construction.
Diversification Opportunities for Ruentex Engineering and Lihtai Construction
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruentex and Lihtai is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Engineering Constructi and Lihtai Construction Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lihtai Construction 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 Lihtai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lihtai Construction has no effect on the direction of Ruentex Engineering i.e., Ruentex Engineering and Lihtai Construction go up and down completely randomly.
Pair Corralation between Ruentex Engineering and Lihtai Construction
Assuming the 90 days trading horizon Ruentex Engineering is expected to generate 1.51 times less return on investment than Lihtai Construction. In addition to that, Ruentex Engineering is 1.64 times more volatile than Lihtai Construction Enterprise. It trades about 0.03 of its total potential returns per unit of risk. Lihtai Construction Enterprise is currently generating about 0.07 per unit of volatility. If you would invest 5,313 in Lihtai Construction Enterprise on October 30, 2024 and sell it today you would earn a total of 2,917 from holding Lihtai Construction Enterprise or generate 54.9% 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. Lihtai Construction Enterprise
Performance |
| Timeline |
| Ruentex Engineering |
| Lihtai Construction |
Ruentex Engineering and Lihtai Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Engineering and Lihtai Construction
The main advantage of trading using opposite Ruentex Engineering and Lihtai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Engineering position performs unexpectedly, Lihtai Construction 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 Lihtai Construction will offset losses from the drop in Lihtai Construction'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 |
| Lihtai Construction vs. Energenesis Biomedical Co | Lihtai Construction vs. Chi Hua Fitness | Lihtai Construction vs. Power Wind Health | Lihtai Construction vs. Golden Biotechnology |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |