Correlation Between Ruentex Development and First Hotel
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and First Hotel 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 First Hotel 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 First Hotel Co, you can compare the effects of market volatilities on Ruentex Development and First Hotel 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 First Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and First Hotel.
Diversification Opportunities for Ruentex Development and First Hotel
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ruentex and First is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and First Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hotel 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 First Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hotel has no effect on the direction of Ruentex Development i.e., Ruentex Development and First Hotel go up and down completely randomly.
Pair Corralation between Ruentex Development and First Hotel
Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the First Hotel. In addition to that, Ruentex Development is 1.99 times more volatile than First Hotel Co. It trades about -0.16 of its total potential returns per unit of risk. First Hotel Co is currently generating about -0.24 per unit of volatility. If you would invest 1,500 in First Hotel Co on September 13, 2024 and sell it today you would lose (40.00) from holding First Hotel Co or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. First Hotel Co
Performance |
| Timeline |
| Ruentex Development |
| First Hotel |
Ruentex Development and First Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and First Hotel
The main advantage of trading using opposite Ruentex Development and First Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, First Hotel 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 First Hotel will offset losses from the drop in First Hotel'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 |
| First Hotel vs. Feng Tay Enterprises | First Hotel vs. Ruentex Development Co | First Hotel vs. WiseChip Semiconductor | First Hotel vs. Novatek Microelectronics Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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