Correlation Between Ruentex Development and Transcend Information
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Transcend Information 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 Transcend Information 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 Transcend Information, you can compare the effects of market volatilities on Ruentex Development and Transcend Information 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 Transcend Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Transcend Information.
Diversification Opportunities for Ruentex Development and Transcend Information
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruentex and Transcend is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Transcend Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcend Information 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 Transcend Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcend Information has no effect on the direction of Ruentex Development i.e., Ruentex Development and Transcend Information go up and down completely randomly.
Pair Corralation between Ruentex Development and Transcend Information
Assuming the 90 days trading horizon Ruentex Development is expected to generate 3.11 times less return on investment than Transcend Information. In addition to that, Ruentex Development is 1.26 times more volatile than Transcend Information. It trades about 0.01 of its total potential returns per unit of risk. Transcend Information is currently generating about 0.06 per unit of volatility. If you would invest 6,680 in Transcend Information on September 13, 2024 and sell it today you would earn a total of 2,740 from holding Transcend Information or generate 41.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Transcend Information
Performance |
| Timeline |
| Ruentex Development |
| Transcend Information |
Ruentex Development and Transcend Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Transcend Information
The main advantage of trading using opposite Ruentex Development and Transcend Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Transcend Information 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 Transcend Information will offset losses from the drop in Transcend Information'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 |
| Transcend Information vs. AU Optronics | Transcend Information vs. Innolux Corp | Transcend Information vs. Ruentex Development Co | Transcend Information 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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