Correlation Between Ruentex Industries and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Ruentex Industries and Cathay 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 Industries and Cathay Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruentex Industries and Cathay Financial Holding, you can compare the effects of market volatilities on Ruentex Industries and Cathay 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 Industries with a short position of Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Industries and Cathay Financial.
Diversification Opportunities for Ruentex Industries and Cathay Financial
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ruentex and Cathay is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Industries and Cathay Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Financial Holding 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 Cathay Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Financial Holding has no effect on the direction of Ruentex Industries i.e., Ruentex Industries and Cathay Financial go up and down completely randomly.
Pair Corralation between Ruentex Industries and Cathay Financial
Assuming the 90 days trading horizon Ruentex Industries is expected to generate 1.12 times less return on investment than Cathay Financial. In addition to that, Ruentex Industries is 1.18 times more volatile than Cathay Financial Holding. It trades about 0.08 of its total potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.11 per unit of volatility. If you would invest 4,395 in Cathay Financial Holding on August 25, 2024 and sell it today you would earn a total of 2,285 from holding Cathay Financial Holding or generate 51.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Industries vs. Cathay Financial Holding
Performance |
| Timeline |
| Ruentex Industries |
| Cathay Financial Holding |
Ruentex Industries and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Industries and Cathay Financial
The main advantage of trading using opposite Ruentex Industries and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Industries position performs unexpectedly, Cathay 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 Cathay Financial will offset losses from the drop in Cathay Financial's long position.| Ruentex Industries vs. Ruentex Development Co | Ruentex Industries vs. Fubon Financial Holding | Ruentex Industries vs. Cathay Financial Holding | Ruentex Industries vs. Pou Chen Corp |
| Cathay Financial vs. Fubon Financial Holding | Cathay Financial vs. CTBC Financial Holding | Cathay Financial vs. Mega Financial Holding | Cathay Financial vs. First Financial Holding |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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