Correlation Between Luo Lih and Ruentex Development
Can any of the company-specific risk be diversified away by investing in both Luo Lih 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 Luo Lih and Ruentex Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luo Lih Fen and Ruentex Development Co, you can compare the effects of market volatilities on Luo Lih 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 Luo Lih with a short position of Ruentex Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luo Lih and Ruentex Development.
Diversification Opportunities for Luo Lih and Ruentex Development
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Luo and Ruentex is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Luo Lih Fen and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development and Luo Lih 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 Luo Lih Fen 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 Luo Lih i.e., Luo Lih and Ruentex Development go up and down completely randomly.
Pair Corralation between Luo Lih and Ruentex Development
Assuming the 90 days trading horizon Luo Lih Fen is expected to under-perform the Ruentex Development. But the stock apears to be less risky and, when comparing its historical volatility, Luo Lih Fen is 1.11 times less risky than Ruentex Development. The stock trades about -0.4 of its potential returns per unit of risk. The Ruentex Development Co is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 4,820 in Ruentex Development Co on September 12, 2024 and sell it today you would lose (245.00) from holding Ruentex Development Co or give up 5.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Luo Lih Fen vs. Ruentex Development Co
Performance |
| Timeline |
| Luo Lih Fen |
| Ruentex Development |
Luo Lih and Ruentex Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luo Lih and Ruentex Development
The main advantage of trading using opposite Luo Lih and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luo Lih 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.| Luo Lih vs. Ruentex Development Co | Luo Lih vs. Symtek Automation Asia | Luo Lih vs. CTCI Corp | Luo Lih vs. Information Technology Total |
| Ruentex Development vs. Chong Hong Construction | Ruentex Development vs. Symtek Automation Asia | Ruentex Development vs. WiseChip Semiconductor | Ruentex Development vs. Novatek Microelectronics 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |