Correlation Between Ruentex Development and Lihtai Construction
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Lihtai Construction 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 Lihtai Construction 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 Lihtai Construction Enterprise, you can compare the effects of market volatilities on Ruentex Development and Lihtai Construction 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 Lihtai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Lihtai Construction.
Diversification Opportunities for Ruentex Development and Lihtai Construction
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ruentex and Lihtai is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Lihtai Construction Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lihtai 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 Lihtai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lihtai Construction has no effect on the direction of Ruentex Development i.e., Ruentex Development and Lihtai Construction go up and down completely randomly.
Pair Corralation between Ruentex Development and Lihtai Construction
Assuming the 90 days trading horizon Ruentex Development is expected to generate 18.94 times less return on investment than Lihtai Construction. In addition to that, Ruentex Development is 1.28 times more volatile than Lihtai Construction Enterprise. It trades about 0.0 of its total potential returns per unit of risk. Lihtai Construction Enterprise is currently generating about 0.07 per unit of volatility. If you would invest 5,313 in Lihtai Construction Enterprise on October 30, 2024 and sell it today you would earn a total of 2,917 from holding Lihtai Construction Enterprise or generate 54.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Lihtai Construction Enterprise
Performance |
| Timeline |
| Ruentex Development |
| Lihtai Construction |
Ruentex Development and Lihtai Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Lihtai Construction
The main advantage of trading using opposite Ruentex Development and Lihtai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Lihtai Construction 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 Lihtai Construction will offset losses from the drop in Lihtai Construction'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 |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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