Correlation Between Ruentex Materials and Bonny Worldwide
Can any of the company-specific risk be diversified away by investing in both Ruentex Materials and Bonny Worldwide 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 Bonny Worldwide 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 Bonny Worldwide, you can compare the effects of market volatilities on Ruentex Materials and Bonny Worldwide 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 Bonny Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Materials and Bonny Worldwide.
Diversification Opportunities for Ruentex Materials and Bonny Worldwide
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ruentex and Bonny is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Materials Co and Bonny Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonny Worldwide 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 Bonny Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonny Worldwide has no effect on the direction of Ruentex Materials i.e., Ruentex Materials and Bonny Worldwide go up and down completely randomly.
Pair Corralation between Ruentex Materials and Bonny Worldwide
Assuming the 90 days trading horizon Ruentex Materials is expected to generate 7.34 times less return on investment than Bonny Worldwide. But when comparing it to its historical volatility, Ruentex Materials Co is 1.67 times less risky than Bonny Worldwide. It trades about 0.02 of its potential returns per unit of risk. Bonny Worldwide is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 18,450 in Bonny Worldwide on September 1, 2024 and sell it today you would earn a total of 8,700 from holding Bonny Worldwide or generate 47.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Materials Co vs. Bonny Worldwide
Performance |
| Timeline |
| Ruentex Materials |
| Bonny Worldwide |
Ruentex Materials and Bonny Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Materials and Bonny Worldwide
The main advantage of trading using opposite Ruentex Materials and Bonny Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Materials position performs unexpectedly, Bonny Worldwide 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 Bonny Worldwide will offset losses from the drop in Bonny Worldwide'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 |
| Bonny Worldwide vs. Paiho Shih Holdings | Bonny Worldwide vs. Thunder Tiger Corp | Bonny Worldwide vs. Feng Tay Enterprises | Bonny Worldwide vs. Sinyi Realty |
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.
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