Correlation Between Ruentex Materials and Wayi International
Can any of the company-specific risk be diversified away by investing in both Ruentex Materials and Wayi International 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 Materials and Wayi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruentex Materials Co and Wayi International Digital, you can compare the effects of market volatilities on Ruentex Materials and Wayi International 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 Materials with a short position of Wayi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Materials and Wayi International.
Diversification Opportunities for Ruentex Materials and Wayi International
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruentex and Wayi is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Materials Co and Wayi International Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayi International and Ruentex Materials 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 Materials Co are associated (or correlated) with Wayi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayi International has no effect on the direction of Ruentex Materials i.e., Ruentex Materials and Wayi International go up and down completely randomly.
Pair Corralation between Ruentex Materials and Wayi International
Assuming the 90 days trading horizon Ruentex Materials is expected to generate 13.49 times less return on investment than Wayi International. But when comparing it to its historical volatility, Ruentex Materials Co is 2.29 times less risky than Wayi International. It trades about 0.01 of its potential returns per unit of risk. Wayi International Digital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,460 in Wayi International Digital on September 12, 2024 and sell it today you would earn a total of 9,590 from holding Wayi International Digital or generate 128.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Materials Co vs. Wayi International Digital
Performance |
| Timeline |
| Ruentex Materials |
| Wayi International |
Ruentex Materials and Wayi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Materials and Wayi International
The main advantage of trading using opposite Ruentex Materials and Wayi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Materials position performs unexpectedly, Wayi International 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 Wayi International will offset losses from the drop in Wayi International's long position.| Ruentex Materials vs. Taiwan Cement Corp | Ruentex Materials vs. Goldsun Building Materials | Ruentex Materials vs. Huang Hsiang Construction | Ruentex Materials vs. Chia Hsin Cement |
| Wayi International vs. Ruentex Materials Co | Wayi International vs. Grand Plastic Technology | Wayi International vs. General Plastic Industrial | Wayi International vs. International Games System |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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