Correlation Between Ruentex Development and Asia Electronic
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Asia Electronic 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 Asia Electronic 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 Asia Electronic Material, you can compare the effects of market volatilities on Ruentex Development and Asia Electronic 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 Asia Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Asia Electronic.
Diversification Opportunities for Ruentex Development and Asia Electronic
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruentex and Asia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Asia Electronic Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Electronic Material 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 Asia Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Electronic Material has no effect on the direction of Ruentex Development i.e., Ruentex Development and Asia Electronic go up and down completely randomly.
Pair Corralation between Ruentex Development and Asia Electronic
Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 0.87 times more return on investment than Asia Electronic. However, Ruentex Development Co is 1.15 times less risky than Asia Electronic. It trades about 0.06 of its potential returns per unit of risk. Asia Electronic Material is currently generating about 0.01 per unit of risk. If you would invest 3,645 in Ruentex Development Co on September 14, 2024 and sell it today you would earn a total of 975.00 from holding Ruentex Development Co or generate 26.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Asia Electronic Material
Performance |
| Timeline |
| Ruentex Development |
| Asia Electronic Material |
Ruentex Development and Asia Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Asia Electronic
The main advantage of trading using opposite Ruentex Development and Asia Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Asia Electronic 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 Asia Electronic will offset losses from the drop in Asia Electronic'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 |
| Asia Electronic vs. ANJI Technology Co | Asia Electronic vs. Emerging Display Technologies | Asia Electronic vs. U Tech Media Corp | Asia Electronic 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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