Correlation Between Ruentex Industries and Singtex Industrial
Can any of the company-specific risk be diversified away by investing in both Ruentex Industries and Singtex Industrial 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 Singtex Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruentex Industries and Singtex Industrial Co, you can compare the effects of market volatilities on Ruentex Industries and Singtex Industrial 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 Singtex Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Industries and Singtex Industrial.
Diversification Opportunities for Ruentex Industries and Singtex Industrial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruentex and Singtex is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Industries and Singtex Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singtex Industrial 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 Singtex Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singtex Industrial has no effect on the direction of Ruentex Industries i.e., Ruentex Industries and Singtex Industrial go up and down completely randomly.
Pair Corralation between Ruentex Industries and Singtex Industrial
Assuming the 90 days trading horizon Ruentex Industries is expected to under-perform the Singtex Industrial. In addition to that, Ruentex Industries is 2.06 times more volatile than Singtex Industrial Co. It trades about -0.1 of its total potential returns per unit of risk. Singtex Industrial Co is currently generating about -0.06 per unit of volatility. If you would invest 2,825 in Singtex Industrial Co on November 2, 2024 and sell it today you would lose (105.00) from holding Singtex Industrial Co or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Industries vs. Singtex Industrial Co
Performance |
| Timeline |
| Ruentex Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Singtex Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ruentex Industries and Singtex Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Industries and Singtex Industrial
The main advantage of trading using opposite Ruentex Industries and Singtex Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Industries position performs unexpectedly, Singtex Industrial 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 Singtex Industrial will offset losses from the drop in Singtex Industrial's long position.The idea behind Ruentex Industries and Singtex Industrial Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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