Correlation Between Ruentex Development and Jinan Acetate
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Jinan Acetate 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 Jinan Acetate 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 Jinan Acetate Chemical, you can compare the effects of market volatilities on Ruentex Development and Jinan Acetate 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 Jinan Acetate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Jinan Acetate.
Diversification Opportunities for Ruentex Development and Jinan Acetate
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ruentex and Jinan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Jinan Acetate Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinan Acetate Chemical 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 Jinan Acetate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinan Acetate Chemical has no effect on the direction of Ruentex Development i.e., Ruentex Development and Jinan Acetate go up and down completely randomly.
Pair Corralation between Ruentex Development and Jinan Acetate
Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 0.74 times more return on investment than Jinan Acetate. However, Ruentex Development Co is 1.36 times less risky than Jinan Acetate. It trades about 0.05 of its potential returns per unit of risk. Jinan Acetate Chemical is currently generating about 0.04 per unit of risk. If you would invest 3,700 in Ruentex Development Co on September 12, 2024 and sell it today you would earn a total of 880.00 from holding Ruentex Development Co or generate 23.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Jinan Acetate Chemical
Performance |
| Timeline |
| Ruentex Development |
| Jinan Acetate Chemical |
Ruentex Development and Jinan Acetate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Jinan Acetate
The main advantage of trading using opposite Ruentex Development and Jinan Acetate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Jinan Acetate 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 Jinan Acetate will offset losses from the drop in Jinan Acetate's long position.| Ruentex Development vs. Chong Hong Construction | Ruentex Development vs. Symtek Automation Asia | Ruentex Development vs. WiseChip Semiconductor | Ruentex Development vs. Novatek Microelectronics Corp |
| Jinan Acetate vs. Tainan Spinning Co | Jinan Acetate vs. Lealea Enterprise Co | Jinan Acetate vs. China Petrochemical Development | Jinan Acetate vs. Ruentex Development Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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