Correlation Between Ruentex Development and China Steel
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and China Steel 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 China Steel 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 China Steel Corp, you can compare the effects of market volatilities on Ruentex Development and China Steel 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 China Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and China Steel.
Diversification Opportunities for Ruentex Development and China Steel
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ruentex and China is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and China Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Steel Corp 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 China Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Steel Corp has no effect on the direction of Ruentex Development i.e., Ruentex Development and China Steel go up and down completely randomly.
Pair Corralation between Ruentex Development and China Steel
Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 1.73 times more return on investment than China Steel. However, Ruentex Development is 1.73 times more volatile than China Steel Corp. It trades about 0.01 of its potential returns per unit of risk. China Steel Corp is currently generating about -0.06 per unit of risk. If you would invest 4,435 in Ruentex Development Co on September 12, 2024 and sell it today you would earn a total of 145.00 from holding Ruentex Development Co or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Ruentex Development Co vs. China Steel Corp
Performance |
| Timeline |
| Ruentex Development |
| China Steel Corp |
Ruentex Development and China Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and China Steel
The main advantage of trading using opposite Ruentex Development and China Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, China Steel 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 China Steel will offset losses from the drop in China Steel's long position.| Ruentex Development vs. Chong Hong Construction | Ruentex Development vs. Symtek Automation Asia | Ruentex Development vs. WiseChip Semiconductor | Ruentex Development vs. Novatek Microelectronics Corp |
| China Steel vs. Tainan Spinning Co | China Steel vs. Lealea Enterprise Co | China Steel vs. China Petrochemical Development | China Steel vs. Ruentex Development Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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