Correlation Between Far Eastern and Ruentex Engineering
Can any of the company-specific risk be diversified away by investing in both Far Eastern and Ruentex Engineering 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 Far Eastern and Ruentex Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far Eastern Department and Ruentex Engineering Construction, you can compare the effects of market volatilities on Far Eastern and Ruentex Engineering 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 Far Eastern with a short position of Ruentex Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far Eastern and Ruentex Engineering.
Diversification Opportunities for Far Eastern and Ruentex Engineering
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Far and Ruentex is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Far Eastern Department and Ruentex Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Engineering and Far Eastern 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 Far Eastern Department are associated (or correlated) with Ruentex Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Engineering has no effect on the direction of Far Eastern i.e., Far Eastern and Ruentex Engineering go up and down completely randomly.
Pair Corralation between Far Eastern and Ruentex Engineering
Assuming the 90 days trading horizon Far Eastern Department is expected to under-perform the Ruentex Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Far Eastern Department is 1.69 times less risky than Ruentex Engineering. The stock trades about -0.09 of its potential returns per unit of risk. The Ruentex Engineering Construction is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 13,350 in Ruentex Engineering Construction on September 1, 2024 and sell it today you would earn a total of 950.00 from holding Ruentex Engineering Construction or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far Eastern Department vs. Ruentex Engineering Constructi
Performance |
| Timeline |
| Far Eastern Department |
| Ruentex Engineering |
Far Eastern and Ruentex Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far Eastern and Ruentex Engineering
The main advantage of trading using opposite Far Eastern and Ruentex Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far Eastern position performs unexpectedly, Ruentex Engineering 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 Engineering will offset losses from the drop in Ruentex Engineering's long position.| Far Eastern vs. Chaintech Technology Corp | Far Eastern vs. AVerMedia Technologies | Far Eastern vs. Avision | Far Eastern vs. Clevo Co |
| Ruentex Engineering vs. Ruentex Industries | Ruentex Engineering vs. Huaku Development Co | Ruentex Engineering vs. Ruentex Development Co | Ruentex Engineering vs. Highwealth Construction Corp |
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.
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