Correlation Between Ruentex Development and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Ligitek Electronics 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 Ligitek Electronics 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 Ligitek Electronics Co, you can compare the effects of market volatilities on Ruentex Development and Ligitek Electronics 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 Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Ligitek Electronics.
Diversification Opportunities for Ruentex Development and Ligitek Electronics
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ruentex and Ligitek is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics 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 Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Ruentex Development i.e., Ruentex Development and Ligitek Electronics go up and down completely randomly.
Pair Corralation between Ruentex Development and Ligitek Electronics
Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the Ligitek Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Development Co is 2.94 times less risky than Ligitek Electronics. The stock trades about -0.06 of its potential returns per unit of risk. The Ligitek Electronics Co is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 3,815 in Ligitek Electronics Co on September 14, 2024 and sell it today you would earn a total of 720.00 from holding Ligitek Electronics Co or generate 18.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ruentex Development Co vs. Ligitek Electronics Co
Performance |
| Timeline |
| Ruentex Development |
| Ligitek Electronics |
Ruentex Development and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Ligitek Electronics
The main advantage of trading using opposite Ruentex Development and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Ligitek Electronics 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 Ligitek Electronics will offset losses from the drop in Ligitek Electronics' 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 |
| Ligitek Electronics vs. ANJI Technology Co | Ligitek Electronics vs. Emerging Display Technologies | Ligitek Electronics vs. U Tech Media Corp | Ligitek Electronics 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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