Correlation Between Ruentex Materials and Farglory Land
Can any of the company-specific risk be diversified away by investing in both Ruentex Materials and Farglory Land 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 Farglory Land 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 Farglory Land Development, you can compare the effects of market volatilities on Ruentex Materials and Farglory Land 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 Farglory Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Materials and Farglory Land.
Diversification Opportunities for Ruentex Materials and Farglory Land
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ruentex and Farglory is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Materials Co and Farglory Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farglory Land Development 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 Farglory Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farglory Land Development has no effect on the direction of Ruentex Materials i.e., Ruentex Materials and Farglory Land go up and down completely randomly.
Pair Corralation between Ruentex Materials and Farglory Land
Assuming the 90 days trading horizon Ruentex Materials Co is expected to under-perform the Farglory Land. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Materials Co is 2.05 times less risky than Farglory Land. The stock trades about -0.12 of its potential returns per unit of risk. The Farglory Land Development is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 6,650 in Farglory Land Development on September 1, 2024 and sell it today you would lose (100.00) from holding Farglory Land Development or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ruentex Materials Co vs. Farglory Land Development
Performance |
| Timeline |
| Ruentex Materials |
| Farglory Land Development |
Ruentex Materials and Farglory Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Materials and Farglory Land
The main advantage of trading using opposite Ruentex Materials and Farglory Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Materials position performs unexpectedly, Farglory Land 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 Farglory Land will offset losses from the drop in Farglory Land's long position.| Ruentex Materials vs. Taiwan Cement Corp | Ruentex Materials vs. Asia Cement Corp | Ruentex Materials vs. Goldsun Building Materials | Ruentex Materials vs. Universal Cement Corp |
| Farglory Land vs. Ruentex Development Co | Farglory Land vs. CTCI Corp | Farglory Land vs. Information Technology Total | Farglory Land vs. Ennoconn 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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