Correlation Between Da Cin and Ruentex Engineering

Can any of the company-specific risk be diversified away by investing in both Da Cin and Ruentex Engineering 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 Da Cin and Ruentex Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Da Cin Construction Co and Ruentex Engineering Construction, you can compare the effects of market volatilities on Da Cin and Ruentex Engineering 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 Da Cin with a short position of Ruentex Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Da Cin and Ruentex Engineering.

Diversification Opportunities for Da Cin and Ruentex Engineering

0.71

Correlation Coefficient

Da Cin  Ruentex Engineering

Poor diversification

The 3 months correlation between 2535 and Ruentex is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Da Cin Construction Co and Ruentex Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Engineering and Da Cin 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 Da Cin Construction Co are associated (or correlated) with Ruentex Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Engineering has no effect on the direction of Da Cin i.e., Da Cin and Ruentex Engineering go up and down completely randomly.

Pair Corralation between Da Cin and Ruentex Engineering

Assuming the 90 days trading horizon Da Cin Construction Co is expected to under-perform the Ruentex Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Da Cin Construction Co is 1.72 times less risky than Ruentex Engineering. The stock trades about -0.13 of its potential returns per unit of risk. The Ruentex Engineering Construction is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  15,100  in Ruentex Engineering Construction on September 3, 2024 and sell it today you would lose (800.00) from holding Ruentex Engineering Construction or give up 5.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Da Cin Construction Co  vs.  Ruentex Engineering Constructi

Da Cin Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Da Cin Construction Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Ruentex Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ruentex Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ruentex Engineering is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Da Cin and Ruentex Engineering

The main advantage of trading using opposite Da Cin and Ruentex Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Da Cin position performs unexpectedly, Ruentex Engineering 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 Ruentex Engineering will offset losses from the drop in Ruentex Engineering's long position.

The idea behind Da Cin Construction Co and Ruentex Engineering Construction pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.