Correlation Between Ruentex Development and EMemory Technology
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and EMemory Technology 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 EMemory Technology 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 eMemory Technology, you can compare the effects of market volatilities on Ruentex Development and EMemory Technology 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 EMemory Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and EMemory Technology.
Diversification Opportunities for Ruentex Development and EMemory Technology
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ruentex and EMemory is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and eMemory Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMemory Technology 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 EMemory Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eMemory Technology has no effect on the direction of Ruentex Development i.e., Ruentex Development and EMemory Technology go up and down completely randomly.
Pair Corralation between Ruentex Development and EMemory Technology
Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the EMemory Technology. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Development Co is 2.5 times less risky than EMemory Technology. The stock trades about -0.16 of its potential returns per unit of risk. The eMemory Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 307,500 in eMemory Technology on September 13, 2024 and sell it today you would earn a total of 6,000 from holding eMemory Technology or generate 1.95% 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. eMemory Technology
Performance |
| Timeline |
| Ruentex Development |
| eMemory Technology |
Ruentex Development and EMemory Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and EMemory Technology
The main advantage of trading using opposite Ruentex Development and EMemory Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, EMemory Technology 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 EMemory Technology will offset losses from the drop in EMemory Technology'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 |
| EMemory Technology vs. Nan Ya Printed | EMemory Technology vs. Global Unichip Corp | EMemory Technology vs. Aspeed Technology | EMemory Technology vs. Alchip Technologies |
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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