Correlation Between Ruentex Development and King Yuan
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and King Yuan 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 King Yuan 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 King Yuan Electronics, you can compare the effects of market volatilities on Ruentex Development and King Yuan 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 King Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and King Yuan.
Diversification Opportunities for Ruentex Development and King Yuan
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ruentex and King is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and King Yuan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Yuan Electronics 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 King Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Yuan Electronics has no effect on the direction of Ruentex Development i.e., Ruentex Development and King Yuan go up and down completely randomly.
Pair Corralation between Ruentex Development and King Yuan
Assuming the 90 days trading horizon Ruentex Development is expected to generate 1.45 times less return on investment than King Yuan. But when comparing it to its historical volatility, Ruentex Development Co is 1.47 times less risky than King Yuan. It trades about 0.06 of its potential returns per unit of risk. King Yuan Electronics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,310 in King Yuan Electronics on September 14, 2024 and sell it today you would earn a total of 3,290 from holding King Yuan Electronics or generate 39.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. King Yuan Electronics
Performance |
| Timeline |
| Ruentex Development |
| King Yuan Electronics |
Ruentex Development and King Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and King Yuan
The main advantage of trading using opposite Ruentex Development and King Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, King Yuan 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 King Yuan will offset losses from the drop in King Yuan'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 |
| King Yuan vs. AU Optronics | King Yuan vs. Innolux Corp | King Yuan vs. Ruentex Development Co | King Yuan 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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