Correlation Between Feng Tay and Ruentex Development
Can any of the company-specific risk be diversified away by investing in both Feng Tay and Ruentex Development 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 Feng Tay and Ruentex Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Feng Tay Enterprises and Ruentex Development Co, you can compare the effects of market volatilities on Feng Tay and Ruentex Development 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 Feng Tay with a short position of Ruentex Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Tay and Ruentex Development.
Diversification Opportunities for Feng Tay and Ruentex Development
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Feng and Ruentex is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Feng Tay Enterprises and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development and Feng Tay 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 Feng Tay Enterprises are associated (or correlated) with Ruentex Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Development has no effect on the direction of Feng Tay i.e., Feng Tay and Ruentex Development go up and down completely randomly.
Pair Corralation between Feng Tay and Ruentex Development
Assuming the 90 days trading horizon Feng Tay Enterprises is expected to under-perform the Ruentex Development. In addition to that, Feng Tay is 1.62 times more volatile than Ruentex Development Co. It trades about -0.01 of its total potential returns per unit of risk. Ruentex Development Co is currently generating about 0.02 per unit of volatility. If you would invest 4,585 in Ruentex Development Co on September 9, 2024 and sell it today you would earn a total of 35.00 from holding Ruentex Development Co or generate 0.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Feng Tay Enterprises vs. Ruentex Development Co
Performance |
Timeline |
Feng Tay Enterprises |
Ruentex Development |
Feng Tay and Ruentex Development Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Feng Tay and Ruentex Development
The main advantage of trading using opposite Feng Tay and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Tay position performs unexpectedly, Ruentex Development 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 Development will offset losses from the drop in Ruentex Development's long position.Feng Tay vs. Pou Chen Corp | Feng Tay vs. Eclat Textile Co | Feng Tay vs. Hotai Motor Co | Feng Tay vs. Giant Manufacturing 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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