Correlation Between Ruentex Development and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Hung Sheng 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 Sheng 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 Sheng Construction, you can compare the effects of market volatilities on Ruentex Development and Hung Sheng 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 Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Hung Sheng.
Diversification Opportunities for Ruentex Development and Hung Sheng
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ruentex and Hung is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Hung Sheng Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Sheng Construction 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 Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Sheng Construction has no effect on the direction of Ruentex Development i.e., Ruentex Development and Hung Sheng go up and down completely randomly.
Pair Corralation between Ruentex Development and Hung Sheng
Assuming the 90 days trading horizon Ruentex Development is expected to generate 7.01 times less return on investment than Hung Sheng. In addition to that, Ruentex Development is 1.41 times more volatile than Hung Sheng Construction. It trades about 0.03 of its total potential returns per unit of risk. Hung Sheng Construction is currently generating about 0.33 per unit of volatility. If you would invest 2,410 in Hung Sheng Construction on November 29, 2024 and sell it today you would earn a total of 120.00 from holding Hung Sheng Construction or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Hung Sheng Construction
Performance |
| Timeline |
| Ruentex Development |
| Hung Sheng Construction |
Ruentex Development and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Hung Sheng
The main advantage of trading using opposite Ruentex Development and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Hung Sheng 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 Sheng will offset losses from the drop in Hung Sheng'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 Sheng vs. Chainqui Construction Development | Hung Sheng vs. Kee Tai Properties | Hung Sheng vs. BES Engineering Co | Hung Sheng vs. Zinwell |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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