Correlation Between Ruentex Development and Shinkong Synthetic
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Shinkong Synthetic 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 Shinkong Synthetic 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 Shinkong Synthetic Fiber, you can compare the effects of market volatilities on Ruentex Development and Shinkong Synthetic 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 Shinkong Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Shinkong Synthetic.
Diversification Opportunities for Ruentex Development and Shinkong Synthetic
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ruentex and Shinkong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Shinkong Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Synthetic Fiber 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 Shinkong Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Synthetic Fiber has no effect on the direction of Ruentex Development i.e., Ruentex Development and Shinkong Synthetic go up and down completely randomly.
Pair Corralation between Ruentex Development and Shinkong Synthetic
Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 1.43 times more return on investment than Shinkong Synthetic. However, Ruentex Development is 1.43 times more volatile than Shinkong Synthetic Fiber. It trades about 0.04 of its potential returns per unit of risk. Shinkong Synthetic Fiber is currently generating about -0.01 per unit of risk. If you would invest 3,585 in Ruentex Development Co on December 2, 2024 and sell it today you would earn a total of 665.00 from holding Ruentex Development Co or generate 18.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Shinkong Synthetic Fiber
Performance |
| Timeline |
| Ruentex Development |
| Shinkong Synthetic Fiber |
Ruentex Development and Shinkong Synthetic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Shinkong Synthetic
The main advantage of trading using opposite Ruentex Development and Shinkong Synthetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Shinkong Synthetic 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 Shinkong Synthetic will offset losses from the drop in Shinkong Synthetic'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 |
| Shinkong Synthetic vs. Tainan Spinning Co | Shinkong Synthetic vs. Lealea Enterprise Co | Shinkong Synthetic vs. China Petrochemical Development | Shinkong Synthetic vs. Taiwan Styrene Monomer |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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