Correlation Between Ruentex Development and Daxin Materials
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Daxin Materials 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 Daxin Materials 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 Daxin Materials Corp, you can compare the effects of market volatilities on Ruentex Development and Daxin Materials 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 Daxin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Daxin Materials.
Diversification Opportunities for Ruentex Development and Daxin Materials
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruentex and Daxin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Daxin Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daxin Materials Corp 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 Daxin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daxin Materials Corp has no effect on the direction of Ruentex Development i.e., Ruentex Development and Daxin Materials go up and down completely randomly.
Pair Corralation between Ruentex Development and Daxin Materials
Assuming the 90 days trading horizon Ruentex Development is expected to generate 2.12 times less return on investment than Daxin Materials. But when comparing it to its historical volatility, Ruentex Development Co is 1.7 times less risky than Daxin Materials. It trades about 0.06 of its potential returns per unit of risk. Daxin Materials Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 11,350 in Daxin Materials Corp on September 12, 2024 and sell it today you would earn a total of 9,400 from holding Daxin Materials Corp or generate 82.82% 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. Daxin Materials Corp
Performance |
| Timeline |
| Ruentex Development |
| Daxin Materials Corp |
Ruentex Development and Daxin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Daxin Materials
The main advantage of trading using opposite Ruentex Development and Daxin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Daxin Materials 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 Daxin Materials will offset losses from the drop in Daxin Materials' 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 |
| Daxin Materials vs. Tainan Spinning Co | Daxin Materials vs. Lealea Enterprise Co | Daxin Materials vs. China Petrochemical Development | Daxin Materials 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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