Correlation Between Ruentex Industries and Taiwan Paiho
Can any of the company-specific risk be diversified away by investing in both Ruentex Industries and Taiwan Paiho 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 Taiwan Paiho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruentex Industries and Taiwan Paiho, you can compare the effects of market volatilities on Ruentex Industries and Taiwan Paiho 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 Taiwan Paiho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Industries and Taiwan Paiho.
Diversification Opportunities for Ruentex Industries and Taiwan Paiho
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ruentex and Taiwan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Industries and Taiwan Paiho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Paiho 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 Taiwan Paiho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Paiho has no effect on the direction of Ruentex Industries i.e., Ruentex Industries and Taiwan Paiho go up and down completely randomly.
Pair Corralation between Ruentex Industries and Taiwan Paiho
Assuming the 90 days trading horizon Ruentex Industries is expected to generate 1.2 times more return on investment than Taiwan Paiho. However, Ruentex Industries is 1.2 times more volatile than Taiwan Paiho. It trades about 0.23 of its potential returns per unit of risk. Taiwan Paiho is currently generating about -0.04 per unit of risk. If you would invest 7,590 in Ruentex Industries on August 25, 2024 and sell it today you would earn a total of 600.00 from holding Ruentex Industries or generate 7.91% 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. Taiwan Paiho
Performance |
| Timeline |
| Ruentex Industries |
| Taiwan Paiho |
Ruentex Industries and Taiwan Paiho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Industries and Taiwan Paiho
The main advantage of trading using opposite Ruentex Industries and Taiwan Paiho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Industries position performs unexpectedly, Taiwan Paiho 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 Taiwan Paiho will offset losses from the drop in Taiwan Paiho'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 |
| Taiwan Paiho vs. Taiwan Semiconductor Manufacturing | Taiwan Paiho vs. Hon Hai Precision | Taiwan Paiho vs. MediaTek | Taiwan Paiho 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |