Correlation Between Ruentex Development and Fubon FTSE
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Fubon FTSE 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 FTSE 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 FTSE Vietnam, you can compare the effects of market volatilities on Ruentex Development and Fubon FTSE 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 FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Fubon FTSE.
Diversification Opportunities for Ruentex Development and Fubon FTSE
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ruentex and Fubon is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Fubon FTSE Vietnam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon FTSE Vietnam 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 FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon FTSE Vietnam has no effect on the direction of Ruentex Development i.e., Ruentex Development and Fubon FTSE go up and down completely randomly.
Pair Corralation between Ruentex Development and Fubon FTSE
Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 1.75 times more return on investment than Fubon FTSE. However, Ruentex Development is 1.75 times more volatile than Fubon FTSE Vietnam. It trades about 0.01 of its potential returns per unit of risk. Fubon FTSE Vietnam is currently generating about 0.01 per unit of risk. If you would invest 4,445 in Ruentex Development Co on September 3, 2024 and sell it today you would earn a total of 35.00 from holding Ruentex Development Co or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Fubon FTSE Vietnam
Performance |
| Timeline |
| Ruentex Development |
| Fubon FTSE Vietnam |
Ruentex Development and Fubon FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Fubon FTSE
The main advantage of trading using opposite Ruentex Development and Fubon FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Fubon FTSE 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 FTSE will offset losses from the drop in Fubon FTSE'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 |
| Fubon FTSE vs. Cathay Taiwan 5G | Fubon FTSE vs. Ruentex Development Co | Fubon FTSE vs. Symtek Automation Asia | Fubon FTSE vs. CTCI 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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