Correlation Between Ruentex Development and Sun Sea
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Sun Sea 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 Sun Sea 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 Sun Sea Construction, you can compare the effects of market volatilities on Ruentex Development and Sun Sea 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 Sun Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Sun Sea.
Diversification Opportunities for Ruentex Development and Sun Sea
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ruentex and Sun is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Sun Sea Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Sea Construction 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 Sun Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Sea Construction has no effect on the direction of Ruentex Development i.e., Ruentex Development and Sun Sea go up and down completely randomly.
Pair Corralation between Ruentex Development and Sun Sea
Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 1.38 times more return on investment than Sun Sea. However, Ruentex Development is 1.38 times more volatile than Sun Sea Construction. It trades about 0.05 of its potential returns per unit of risk. Sun Sea Construction is currently generating about -0.29 per unit of risk. If you would invest 4,245 in Ruentex Development Co on November 28, 2024 and sell it today you would earn a total of 35.00 from holding Ruentex Development Co or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Sun Sea Construction
Performance |
| Timeline |
| Ruentex Development |
| Sun Sea Construction |
Ruentex Development and Sun Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Sun Sea
The main advantage of trading using opposite Ruentex Development and Sun Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Sun Sea 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 Sun Sea will offset losses from the drop in Sun Sea'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 |
| Sun Sea vs. Prime Oil Chemical | Sun Sea vs. Sporton International | Sun Sea vs. Oriental Union Chemical | Sun Sea vs. Asmedia Technology |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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