Correlation Between Ruentex Development and Lotes
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Lotes 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 Lotes 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 Lotes Co, you can compare the effects of market volatilities on Ruentex Development and Lotes 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 Lotes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Lotes.
Diversification Opportunities for Ruentex Development and Lotes
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ruentex and Lotes is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Lotes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotes 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 Lotes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotes has no effect on the direction of Ruentex Development i.e., Ruentex Development and Lotes go up and down completely randomly.
Pair Corralation between Ruentex Development and Lotes
Assuming the 90 days trading horizon Ruentex Development is expected to generate 2.65 times less return on investment than Lotes. But when comparing it to its historical volatility, Ruentex Development Co is 1.56 times less risky than Lotes. It trades about 0.06 of its potential returns per unit of risk. Lotes Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 101,000 in Lotes Co on September 14, 2024 and sell it today you would earn a total of 90,000 from holding Lotes Co or generate 89.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Lotes Co
Performance |
| Timeline |
| Ruentex Development |
| Lotes |
Ruentex Development and Lotes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Lotes
The main advantage of trading using opposite Ruentex Development and Lotes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Lotes 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 Lotes will offset losses from the drop in Lotes' 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 |
| Lotes vs. AU Optronics | Lotes vs. Innolux Corp | Lotes vs. Ruentex Development Co | Lotes 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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