Correlation Between Ruentex Development and Tong Hsing
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Tong Hsing 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 Tong Hsing 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 Tong Hsing Electronic, you can compare the effects of market volatilities on Ruentex Development and Tong Hsing 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 Tong Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Tong Hsing.
Diversification Opportunities for Ruentex Development and Tong Hsing
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruentex and Tong is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Tong Hsing Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Hsing Electronic 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 Tong Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Hsing Electronic has no effect on the direction of Ruentex Development i.e., Ruentex Development and Tong Hsing go up and down completely randomly.
Pair Corralation between Ruentex Development and Tong Hsing
Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the Tong Hsing. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Development Co is 1.72 times less risky than Tong Hsing. The stock trades about -0.16 of its potential returns per unit of risk. The Tong Hsing Electronic is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 12,600 in Tong Hsing Electronic on September 13, 2024 and sell it today you would earn a total of 800.00 from holding Tong Hsing Electronic or generate 6.35% 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. Tong Hsing Electronic
Performance |
| Timeline |
| Ruentex Development |
| Tong Hsing Electronic |
Ruentex Development and Tong Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Tong Hsing
The main advantage of trading using opposite Ruentex Development and Tong Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Tong Hsing 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 Tong Hsing will offset losses from the drop in Tong Hsing'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 |
| Tong Hsing vs. Kinsus Interconnect Technology | Tong Hsing vs. Unimicron Technology Corp | Tong Hsing vs. Nan Ya Printed | Tong Hsing vs. WIN Semiconductors |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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