Correlation Between Chong Hong and Ruentex Materials
Can any of the company-specific risk be diversified away by investing in both Chong Hong and Ruentex Materials 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 Chong Hong and Ruentex Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chong Hong Construction and Ruentex Materials Co, you can compare the effects of market volatilities on Chong Hong and Ruentex Materials 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 Chong Hong with a short position of Ruentex Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chong Hong and Ruentex Materials.
Diversification Opportunities for Chong Hong and Ruentex Materials
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chong and Ruentex is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chong Hong Construction and Ruentex Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Materials and Chong Hong 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 Chong Hong Construction are associated (or correlated) with Ruentex Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Materials has no effect on the direction of Chong Hong i.e., Chong Hong and Ruentex Materials go up and down completely randomly.
Pair Corralation between Chong Hong and Ruentex Materials
Assuming the 90 days trading horizon Chong Hong Construction is expected to generate 1.89 times more return on investment than Ruentex Materials. However, Chong Hong is 1.89 times more volatile than Ruentex Materials Co. It trades about 0.05 of its potential returns per unit of risk. Ruentex Materials Co is currently generating about -0.12 per unit of risk. If you would invest 8,750 in Chong Hong Construction on September 1, 2024 and sell it today you would earn a total of 200.00 from holding Chong Hong Construction or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chong Hong Construction vs. Ruentex Materials Co
Performance |
| Timeline |
| Chong Hong Construction |
| Ruentex Materials |
Chong Hong and Ruentex Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chong Hong and Ruentex Materials
The main advantage of trading using opposite Chong Hong and Ruentex Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chong Hong position performs unexpectedly, Ruentex Materials 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 Materials will offset losses from the drop in Ruentex Materials' long position.| Chong Hong vs. Ruentex Development Co | Chong Hong vs. CTCI Corp | Chong Hong vs. Information Technology Total | Chong Hong vs. Ennoconn Corp |
| Ruentex Materials vs. Taiwan Cement Corp | Ruentex Materials vs. Asia Cement Corp | Ruentex Materials vs. Goldsun Building Materials | Ruentex Materials vs. Universal Cement 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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