Correlation Between Ruentex Development and Federal Corp
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Federal Corp 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 Federal Corp 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 Federal Corp, you can compare the effects of market volatilities on Ruentex Development and Federal Corp 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 Federal Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Federal Corp.
Diversification Opportunities for Ruentex Development and Federal Corp
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ruentex and Federal is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Federal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal 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 Federal Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Corp has no effect on the direction of Ruentex Development i.e., Ruentex Development and Federal Corp go up and down completely randomly.
Pair Corralation between Ruentex Development and Federal Corp
Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 1.23 times more return on investment than Federal Corp. However, Ruentex Development is 1.23 times more volatile than Federal Corp. It trades about 0.02 of its potential returns per unit of risk. Federal Corp is currently generating about 0.01 per unit of risk. If you would invest 4,365 in Ruentex Development Co on September 14, 2024 and sell it today you would earn a total of 255.00 from holding Ruentex Development Co or generate 5.84% 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. Federal Corp
Performance |
| Timeline |
| Ruentex Development |
| Federal Corp |
Ruentex Development and Federal Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Federal Corp
The main advantage of trading using opposite Ruentex Development and Federal Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Federal Corp 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 Federal Corp will offset losses from the drop in Federal Corp'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 |
| Federal Corp vs. Feng Tay Enterprises | Federal Corp vs. Ruentex Development Co | Federal Corp vs. WiseChip Semiconductor | Federal Corp vs. Novatek Microelectronics 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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