Correlation Between Taiwan Business and Ruentex Industries
Can any of the company-specific risk be diversified away by investing in both Taiwan Business and Ruentex Industries 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 Taiwan Business and Ruentex Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Business Bank and Ruentex Industries, you can compare the effects of market volatilities on Taiwan Business and Ruentex Industries 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 Taiwan Business with a short position of Ruentex Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Business and Ruentex Industries.
Diversification Opportunities for Taiwan Business and Ruentex Industries
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taiwan and Ruentex is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Business Bank and Ruentex Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Industries and Taiwan Business 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 Taiwan Business Bank are associated (or correlated) with Ruentex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Industries has no effect on the direction of Taiwan Business i.e., Taiwan Business and Ruentex Industries go up and down completely randomly.
Pair Corralation between Taiwan Business and Ruentex Industries
Assuming the 90 days trading horizon Taiwan Business is expected to generate 1.1 times less return on investment than Ruentex Industries. But when comparing it to its historical volatility, Taiwan Business Bank is 1.26 times less risky than Ruentex Industries. It trades about 0.03 of its potential returns per unit of risk. Ruentex Industries is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,899 in Ruentex Industries on August 28, 2024 and sell it today you would earn a total of 1,141 from holding Ruentex Industries or generate 16.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Taiwan Business Bank vs. Ruentex Industries
Performance |
| Timeline |
| Taiwan Business Bank |
| Ruentex Industries |
Taiwan Business and Ruentex Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Business and Ruentex Industries
The main advantage of trading using opposite Taiwan Business and Ruentex Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Business position performs unexpectedly, Ruentex Industries 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 Industries will offset losses from the drop in Ruentex Industries' long position.| Taiwan Business vs. First Financial Holding | Taiwan Business vs. Chang Hwa Commercial | Taiwan Business vs. Sinopac Financial Holdings | Taiwan Business vs. Taishin Financial Holding |
| Ruentex Industries vs. Taiwan Semiconductor Manufacturing | Ruentex Industries vs. Hon Hai Precision | Ruentex Industries vs. MediaTek | Ruentex Industries vs. Chunghwa Telecom 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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