Correlation Between Ruentex Development and Hung Ching
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Hung Ching 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 Hung Ching 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 Hung Ching Development, you can compare the effects of market volatilities on Ruentex Development and Hung Ching 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 Hung Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Hung Ching.
Diversification Opportunities for Ruentex Development and Hung Ching
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ruentex and Hung is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Hung Ching Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Ching Development 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 Hung Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Ching Development has no effect on the direction of Ruentex Development i.e., Ruentex Development and Hung Ching go up and down completely randomly.
Pair Corralation between Ruentex Development and Hung Ching
Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the Hung Ching. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Development Co is 1.72 times less risky than Hung Ching. The stock trades about -0.14 of its potential returns per unit of risk. The Hung Ching Development is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 3,220 in Hung Ching Development on August 31, 2024 and sell it today you would earn a total of 560.00 from holding Hung Ching Development or generate 17.39% 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. Hung Ching Development
Performance |
| Timeline |
| Ruentex Development |
| Hung Ching Development |
Ruentex Development and Hung Ching Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Hung Ching
The main advantage of trading using opposite Ruentex Development and Hung Ching positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Hung Ching 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 Hung Ching will offset losses from the drop in Hung Ching'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 |
| Hung Ching vs. Huaku Development Co | Hung Ching vs. Ruentex Development Co | Hung Ching vs. CTCI Corp | Hung Ching vs. Information Technology Total |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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