Correlation Between Ruentex Development and Nien Hsing
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Nien Hsing 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 Nien Hsing 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 Nien Hsing Textile, you can compare the effects of market volatilities on Ruentex Development and Nien Hsing 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 Nien Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Nien Hsing.
Diversification Opportunities for Ruentex Development and Nien Hsing
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ruentex and Nien is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Nien Hsing Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nien Hsing Textile 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 Nien Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nien Hsing Textile has no effect on the direction of Ruentex Development i.e., Ruentex Development and Nien Hsing go up and down completely randomly.
Pair Corralation between Ruentex Development and Nien Hsing
Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 1.94 times more return on investment than Nien Hsing. However, Ruentex Development is 1.94 times more volatile than Nien Hsing Textile. It trades about 0.03 of its potential returns per unit of risk. Nien Hsing Textile is currently generating about -0.02 per unit of risk. If you would invest 3,625 in Ruentex Development Co on December 6, 2024 and sell it today you would earn a total of 615.00 from holding Ruentex Development Co or generate 16.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Nien Hsing Textile
Performance |
| Timeline |
| Ruentex Development |
| Nien Hsing Textile |
Ruentex Development and Nien Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Nien Hsing
The main advantage of trading using opposite Ruentex Development and Nien Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Nien Hsing 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 Nien Hsing will offset losses from the drop in Nien Hsing'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 |
| Nien Hsing vs. Tainan Enterprises Co | Nien Hsing vs. De Licacy Industrial | Nien Hsing vs. Taiwan Styrene Monomer | Nien Hsing vs. Kaulin Mfg |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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