Correlation Between Ruentex Development and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and United Microelectronics 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 United Microelectronics 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 United Microelectronics, you can compare the effects of market volatilities on Ruentex Development and United Microelectronics 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 United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and United Microelectronics.
Diversification Opportunities for Ruentex Development and United Microelectronics
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruentex and United is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics 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 United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of Ruentex Development i.e., Ruentex Development and United Microelectronics go up and down completely randomly.
Pair Corralation between Ruentex Development and United Microelectronics
Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 0.88 times more return on investment than United Microelectronics. However, Ruentex Development Co is 1.13 times less risky than United Microelectronics. It trades about -0.16 of its potential returns per unit of risk. United Microelectronics is currently generating about -0.27 per unit of risk. If you would invest 4,750 in Ruentex Development Co on September 13, 2024 and sell it today you would lose (175.00) from holding Ruentex Development Co or give up 3.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. United Microelectronics
Performance |
| Timeline |
| Ruentex Development |
| United Microelectronics |
Ruentex Development and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and United Microelectronics
The main advantage of trading using opposite Ruentex Development and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, United Microelectronics 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 United Microelectronics will offset losses from the drop in United Microelectronics' 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 |
| United Microelectronics vs. AU Optronics | United Microelectronics vs. Macronix International Co | United Microelectronics vs. Winbond Electronics Corp | United Microelectronics vs. Hon Hai Precision |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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