Correlation Between Ruentex Industries and Feng Tay
Can any of the company-specific risk be diversified away by investing in both Ruentex Industries and Feng Tay 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 Feng Tay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ruentex Industries and Feng Tay Enterprises, you can compare the effects of market volatilities on Ruentex Industries and Feng Tay 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 Feng Tay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Industries and Feng Tay.
Diversification Opportunities for Ruentex Industries and Feng Tay
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ruentex and Feng is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Industries and Feng Tay Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Tay Enterprises 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 Feng Tay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Tay Enterprises has no effect on the direction of Ruentex Industries i.e., Ruentex Industries and Feng Tay go up and down completely randomly.
Pair Corralation between Ruentex Industries and Feng Tay
Assuming the 90 days trading horizon Ruentex Industries is expected to generate 0.69 times more return on investment than Feng Tay. However, Ruentex Industries is 1.45 times less risky than Feng Tay. It trades about -0.01 of its potential returns per unit of risk. Feng Tay Enterprises is currently generating about -0.01 per unit of risk. If you would invest 7,900 in Ruentex Industries on September 9, 2024 and sell it today you would lose (100.00) from holding Ruentex Industries or give up 1.27% 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. Feng Tay Enterprises
Performance |
Timeline |
Ruentex Industries |
Feng Tay Enterprises |
Ruentex Industries and Feng Tay Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ruentex Industries and Feng Tay
The main advantage of trading using opposite Ruentex Industries and Feng Tay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Industries position performs unexpectedly, Feng Tay 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 Feng Tay will offset losses from the drop in Feng Tay's long position.Ruentex Industries vs. Far Eastern Department | Ruentex Industries vs. LongDa Construction Development | Ruentex Industries vs. HannStar Board Corp | Ruentex Industries vs. Ruentex Development Co |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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