Correlation Between Ruentex Development and Allied Circuit
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Allied Circuit 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 Allied Circuit 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 Allied Circuit Co, you can compare the effects of market volatilities on Ruentex Development and Allied Circuit 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 Allied Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Allied Circuit.
Diversification Opportunities for Ruentex Development and Allied Circuit
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ruentex and Allied is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Allied Circuit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Circuit 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 Allied Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Circuit has no effect on the direction of Ruentex Development i.e., Ruentex Development and Allied Circuit go up and down completely randomly.
Pair Corralation between Ruentex Development and Allied Circuit
Assuming the 90 days trading horizon Ruentex Development is expected to generate 2.65 times less return on investment than Allied Circuit. But when comparing it to its historical volatility, Ruentex Development Co is 1.56 times less risky than Allied Circuit. It trades about 0.01 of its potential returns per unit of risk. Allied Circuit Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 10,339 in Allied Circuit Co on September 13, 2024 and sell it today you would earn a total of 1,561 from holding Allied Circuit Co or generate 15.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Ruentex Development Co vs. Allied Circuit Co
Performance |
| Timeline |
| Ruentex Development |
| Allied Circuit |
Ruentex Development and Allied Circuit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Allied Circuit
The main advantage of trading using opposite Ruentex Development and Allied Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Allied Circuit 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 Allied Circuit will offset losses from the drop in Allied Circuit'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 |
| Allied Circuit vs. ANJI Technology Co | Allied Circuit vs. Emerging Display Technologies | Allied Circuit vs. U Tech Media Corp | Allied Circuit 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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