Correlation Between Ruentex Industries and Eclat Textile
Can any of the company-specific risk be diversified away by investing in both Ruentex Industries and Eclat Textile 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 Industries and Eclat Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruentex Industries and Eclat Textile Co, you can compare the effects of market volatilities on Ruentex Industries and Eclat Textile 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 Industries with a short position of Eclat Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Industries and Eclat Textile.
Diversification Opportunities for Ruentex Industries and Eclat Textile
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ruentex and Eclat is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Industries and Eclat Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclat Textile and Ruentex Industries 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 Industries are associated (or correlated) with Eclat Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclat Textile has no effect on the direction of Ruentex Industries i.e., Ruentex Industries and Eclat Textile go up and down completely randomly.
Pair Corralation between Ruentex Industries and Eclat Textile
Assuming the 90 days trading horizon Ruentex Industries is expected to generate 9.66 times less return on investment than Eclat Textile. But when comparing it to its historical volatility, Ruentex Industries is 1.24 times less risky than Eclat Textile. It trades about 0.0 of its potential returns per unit of risk. Eclat Textile Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 53,100 in Eclat Textile Co on August 28, 2024 and sell it today you would earn a total of 1,500 from holding Eclat Textile Co or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Industries vs. Eclat Textile Co
Performance |
| Timeline |
| Ruentex Industries |
| Eclat Textile |
Ruentex Industries and Eclat Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Industries and Eclat Textile
The main advantage of trading using opposite Ruentex Industries and Eclat Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Industries position performs unexpectedly, Eclat Textile 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 Eclat Textile will offset losses from the drop in Eclat Textile's long position.| Ruentex Industries vs. Taiwan Semiconductor Manufacturing | Ruentex Industries vs. Hon Hai Precision | Ruentex Industries vs. MediaTek | Ruentex Industries vs. Chunghwa Telecom Co |
| Eclat Textile vs. Taiwan Semiconductor Manufacturing | Eclat Textile vs. Hon Hai Precision | Eclat Textile vs. MediaTek | Eclat Textile 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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