Correlation Between Pou Chen and Ruentex Development
Can any of the company-specific risk be diversified away by investing in both Pou Chen 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 Pou Chen and Ruentex Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pou Chen Corp and Ruentex Development Co, you can compare the effects of market volatilities on Pou Chen 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 Pou Chen with a short position of Ruentex Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pou Chen and Ruentex Development.
Diversification Opportunities for Pou Chen and Ruentex Development
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pou and Ruentex is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pou Chen Corp and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development and Pou Chen 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 Pou Chen Corp 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 Pou Chen i.e., Pou Chen and Ruentex Development go up and down completely randomly.
Pair Corralation between Pou Chen and Ruentex Development
Assuming the 90 days trading horizon Pou Chen Corp is expected to generate 1.69 times more return on investment than Ruentex Development. However, Pou Chen is 1.69 times more volatile than Ruentex Development Co. It trades about 0.43 of its potential returns per unit of risk. Ruentex Development Co is currently generating about -0.08 per unit of risk. If you would invest 3,695 in Pou Chen Corp on August 25, 2024 and sell it today you would earn a total of 665.00 from holding Pou Chen Corp or generate 18.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pou Chen Corp vs. Ruentex Development Co
Performance |
| Timeline |
| Pou Chen Corp |
| Ruentex Development |
Pou Chen and Ruentex Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pou Chen and Ruentex Development
The main advantage of trading using opposite Pou Chen and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pou Chen 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.| Pou Chen vs. Taiwan Semiconductor Manufacturing | Pou Chen vs. Hon Hai Precision | Pou Chen vs. MediaTek | Pou Chen vs. Chunghwa Telecom Co |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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