Correlation Between Ruentex Industries and Est Global

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

By analyzing existing cross correlation between Ruentex Industries and Est Global Apparel, you can compare the effects of market volatilities on Ruentex Industries and Est Global 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 Industries with a short position of Est Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Industries and Est Global.

Diversification Opportunities for Ruentex Industries and Est Global

-0.23

Correlation Coefficient

Ruentex Industries  Est Global

Very good diversification

The 3 months correlation between Ruentex and Est is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Industries and Est Global Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Est Global Apparel and Ruentex Industries 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 Industries are associated (or correlated) with Est Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Est Global Apparel has no effect on the direction of Ruentex Industries i.e., Ruentex Industries and Est Global go up and down completely randomly.

Pair Corralation between Ruentex Industries and Est Global

Assuming the 90 days trading horizon Ruentex Industries is expected to generate 2.36 times less return on investment than Est Global. But when comparing it to its historical volatility, Ruentex Industries is 1.93 times less risky than Est Global. It trades about 0.01 of its potential returns per unit of risk. Est Global Apparel is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,800  in Est Global Apparel on September 4, 2024 and sell it today you would lose (15.00) from holding Est Global Apparel or give up 0.83% of portfolio value over 90 days.

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

Ruentex Industries  vs.  Est Global Apparel

Ruentex Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Est Global Apparel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Est Global Apparel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Est Global 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 Ruentex Industries and Est Global

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

The idea behind Ruentex Industries and Est Global Apparel 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.