Correlation Between Ruentex Development and Lien Chang
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Lien Chang 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 Lien Chang 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 Lien Chang Electronic, you can compare the effects of market volatilities on Ruentex Development and Lien Chang 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 Lien Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Lien Chang.
Diversification Opportunities for Ruentex Development and Lien Chang
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ruentex and Lien is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Lien Chang Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Chang Electronic 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 Lien Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Chang Electronic has no effect on the direction of Ruentex Development i.e., Ruentex Development and Lien Chang go up and down completely randomly.
Pair Corralation between Ruentex Development and Lien Chang
Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 0.29 times more return on investment than Lien Chang. However, Ruentex Development Co is 3.43 times less risky than Lien Chang. It trades about -0.22 of its potential returns per unit of risk. Lien Chang Electronic is currently generating about -0.2 per unit of risk. If you would invest 4,820 in Ruentex Development Co on September 12, 2024 and sell it today you would lose (245.00) from holding Ruentex Development Co or give up 5.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Lien Chang Electronic
Performance |
| Timeline |
| Ruentex Development |
| Lien Chang Electronic |
Ruentex Development and Lien Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Lien Chang
The main advantage of trading using opposite Ruentex Development and Lien Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Lien Chang 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 Lien Chang will offset losses from the drop in Lien Chang'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 |
| Lien Chang vs. AU Optronics | Lien Chang vs. Innolux Corp | Lien Chang vs. Ruentex Development Co | Lien Chang vs. WiseChip Semiconductor |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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