Correlation Between Ruentex Development and Taiwan Taffeta
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Taiwan Taffeta 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 Taiwan Taffeta 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 Taiwan Taffeta Fabric, you can compare the effects of market volatilities on Ruentex Development and Taiwan Taffeta 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 Taiwan Taffeta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Taiwan Taffeta.
Diversification Opportunities for Ruentex Development and Taiwan Taffeta
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ruentex and Taiwan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Taiwan Taffeta Fabric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Taffeta Fabric 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 Taiwan Taffeta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Taffeta Fabric has no effect on the direction of Ruentex Development i.e., Ruentex Development and Taiwan Taffeta go up and down completely randomly.
Pair Corralation between Ruentex Development and Taiwan Taffeta
Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the Taiwan Taffeta. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Development Co is 2.24 times less risky than Taiwan Taffeta. The stock trades about -0.08 of its potential returns per unit of risk. The Taiwan Taffeta Fabric is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,530 in Taiwan Taffeta Fabric on October 20, 2024 and sell it today you would lose (25.00) from holding Taiwan Taffeta Fabric or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ruentex Development Co vs. Taiwan Taffeta Fabric
Performance |
| Timeline |
| Ruentex Development |
| Taiwan Taffeta Fabric |
Ruentex Development and Taiwan Taffeta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Taiwan Taffeta
The main advantage of trading using opposite Ruentex Development and Taiwan Taffeta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Taiwan Taffeta 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 Taiwan Taffeta will offset losses from the drop in Taiwan Taffeta'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 |
| Taiwan Taffeta vs. Carnival Industrial Corp | Taiwan Taffeta vs. De Licacy Industrial | Taiwan Taffeta vs. Tex Ray Industrial Co | Taiwan Taffeta vs. Reward Wool Industry |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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