Correlation Between Ruentex Development and Fubon TWSE
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Fubon TWSE 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 Development and Fubon TWSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruentex Development Co and Fubon TWSE Corporate, you can compare the effects of market volatilities on Ruentex Development and Fubon TWSE 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 Development with a short position of Fubon TWSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Fubon TWSE.
Diversification Opportunities for Ruentex Development and Fubon TWSE
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ruentex and Fubon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Fubon TWSE Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon TWSE Corporate and Ruentex Development 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 Development Co are associated (or correlated) with Fubon TWSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon TWSE Corporate has no effect on the direction of Ruentex Development i.e., Ruentex Development and Fubon TWSE go up and down completely randomly.
Pair Corralation between Ruentex Development and Fubon TWSE
Assuming the 90 days trading horizon Ruentex Development is expected to generate 5.41 times less return on investment than Fubon TWSE. In addition to that, Ruentex Development is 1.61 times more volatile than Fubon TWSE Corporate. It trades about 0.01 of its total potential returns per unit of risk. Fubon TWSE Corporate is currently generating about 0.09 per unit of volatility. If you would invest 2,755 in Fubon TWSE Corporate on September 3, 2024 and sell it today you would earn a total of 1,569 from holding Fubon TWSE Corporate or generate 56.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Fubon TWSE Corporate
Performance |
| Timeline |
| Ruentex Development |
| Fubon TWSE Corporate |
Ruentex Development and Fubon TWSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Fubon TWSE
The main advantage of trading using opposite Ruentex Development and Fubon TWSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Fubon TWSE 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 Fubon TWSE will offset losses from the drop in Fubon TWSE's long position.| Ruentex Development vs. Ruentex Industries | Ruentex Development vs. Pou Chen Corp | Ruentex Development vs. Fubon Financial Holding | Ruentex Development vs. Cathay Financial Holding |
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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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