Correlation Between Ruentex Development and Creative Sensor
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Creative Sensor 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 Creative Sensor 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 Creative Sensor, you can compare the effects of market volatilities on Ruentex Development and Creative Sensor 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 Creative Sensor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Creative Sensor.
Diversification Opportunities for Ruentex Development and Creative Sensor
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ruentex and Creative is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Creative Sensor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Sensor 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 Creative Sensor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Sensor has no effect on the direction of Ruentex Development i.e., Ruentex Development and Creative Sensor go up and down completely randomly.
Pair Corralation between Ruentex Development and Creative Sensor
Assuming the 90 days trading horizon Ruentex Development is expected to generate 2.32 times less return on investment than Creative Sensor. But when comparing it to its historical volatility, Ruentex Development Co is 1.52 times less risky than Creative Sensor. It trades about 0.06 of its potential returns per unit of risk. Creative Sensor is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,900 in Creative Sensor on September 14, 2024 and sell it today you would earn a total of 2,350 from holding Creative Sensor or generate 81.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.62% |
| Values | Daily Returns |
Ruentex Development Co vs. Creative Sensor
Performance |
| Timeline |
| Ruentex Development |
| Creative Sensor |
Ruentex Development and Creative Sensor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ruentex Development and Creative Sensor
The main advantage of trading using opposite Ruentex Development and Creative Sensor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Creative Sensor 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 Creative Sensor will offset losses from the drop in Creative Sensor'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 |
| Creative Sensor vs. AU Optronics | Creative Sensor vs. Innolux Corp | Creative Sensor vs. Ruentex Development Co | Creative Sensor vs. WiseChip Semiconductor |
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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