Correlation Between Ruentex Development and X Legend
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and X Legend 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 X Legend 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 X Legend Entertainment Co, you can compare the effects of market volatilities on Ruentex Development and X Legend 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 X Legend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and X Legend.
Diversification Opportunities for Ruentex Development and X Legend
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ruentex and 4994 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and X Legend Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Legend Entertainment 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 X Legend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Legend Entertainment has no effect on the direction of Ruentex Development i.e., Ruentex Development and X Legend go up and down completely randomly.
Pair Corralation between Ruentex Development and X Legend
Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the X Legend. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Development Co is 1.35 times less risky than X Legend. The stock trades about -0.22 of its potential returns per unit of risk. The X Legend Entertainment Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 10,200 in X Legend Entertainment Co on September 12, 2024 and sell it today you would earn a total of 400.00 from holding X Legend Entertainment Co or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. X Legend Entertainment Co
Performance |
| Timeline |
| Ruentex Development |
| X Legend Entertainment |
Ruentex Development and X Legend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and X Legend
The main advantage of trading using opposite Ruentex Development and X Legend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, X Legend 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 X Legend will offset losses from the drop in X Legend'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 |
| X Legend vs. Cheng Mei Materials | X Legend vs. Lemtech Holdings Co | X Legend vs. Chia Chang Co | X Legend 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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