Correlation Between Poya International and Ruentex Development
Can any of the company-specific risk be diversified away by investing in both Poya International and Ruentex Development 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 Poya International and Ruentex Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Poya International Co and Ruentex Development Co, you can compare the effects of market volatilities on Poya International and Ruentex Development 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 Poya International with a short position of Ruentex Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poya International and Ruentex Development.
Diversification Opportunities for Poya International and Ruentex Development
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Poya and Ruentex is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Poya International Co and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development and Poya International 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 Poya International Co are associated (or correlated) with Ruentex Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Development has no effect on the direction of Poya International i.e., Poya International and Ruentex Development go up and down completely randomly.
Pair Corralation between Poya International and Ruentex Development
Assuming the 90 days trading horizon Poya International Co is expected to under-perform the Ruentex Development. But the stock apears to be less risky and, when comparing its historical volatility, Poya International Co is 1.57 times less risky than Ruentex Development. The stock trades about -0.21 of its potential returns per unit of risk. The Ruentex Development Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 4,325 in Ruentex Development Co on October 25, 2024 and sell it today you would lose (95.00) from holding Ruentex Development Co or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Poya International Co vs. Ruentex Development Co
Performance |
| Timeline |
| Poya International |
| Ruentex Development |
Poya International and Ruentex Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Poya International and Ruentex Development
The main advantage of trading using opposite Poya International and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Poya International position performs unexpectedly, Ruentex Development 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 Development will offset losses from the drop in Ruentex Development's long position.| Poya International vs. Taiwan FamilyMart Co | Poya International vs. President Chain Store | Poya International vs. Eclat Textile Co | Poya International vs. Aspeed Technology |
| Ruentex Development vs. Ruentex Industries | Ruentex Development vs. Pou Chen Corp | Ruentex Development vs. Fubon Financial Holding | Ruentex Development vs. Cathay 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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