Correlation Between Ruentex Development and Tainet Communication
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Tainet Communication 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 Tainet Communication 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 Tainet Communication System, you can compare the effects of market volatilities on Ruentex Development and Tainet Communication 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 Tainet Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Tainet Communication.
Diversification Opportunities for Ruentex Development and Tainet Communication
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruentex and Tainet is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Tainet Communication System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainet Communication 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 Tainet Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainet Communication has no effect on the direction of Ruentex Development i.e., Ruentex Development and Tainet Communication go up and down completely randomly.
Pair Corralation between Ruentex Development and Tainet Communication
Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 0.47 times more return on investment than Tainet Communication. However, Ruentex Development Co is 2.11 times less risky than Tainet Communication. It trades about -0.22 of its potential returns per unit of risk. Tainet Communication System is currently generating about -0.47 per unit of risk. If you would invest 4,820 in Ruentex Development Co on September 12, 2024 and sell it today you would lose (240.00) from holding Ruentex Development Co or give up 4.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Tainet Communication System
Performance |
| Timeline |
| Ruentex Development |
| Tainet Communication |
Ruentex Development and Tainet Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Tainet Communication
The main advantage of trading using opposite Ruentex Development and Tainet Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Tainet Communication 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 Tainet Communication will offset losses from the drop in Tainet Communication'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 |
| Tainet Communication vs. Gemtek Technology Co | Tainet Communication vs. Ruentex Development Co | Tainet Communication vs. WiseChip Semiconductor | Tainet Communication 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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