Correlation Between KNH Enterprise and Ruentex Industries
Can any of the company-specific risk be diversified away by investing in both KNH Enterprise and Ruentex Industries 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 KNH Enterprise and Ruentex Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KNH Enterprise Co and Ruentex Industries, you can compare the effects of market volatilities on KNH Enterprise and Ruentex Industries 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 KNH Enterprise with a short position of Ruentex Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNH Enterprise and Ruentex Industries.
Diversification Opportunities for KNH Enterprise and Ruentex Industries
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KNH and Ruentex is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding KNH Enterprise Co and Ruentex Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Industries and KNH Enterprise 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 KNH Enterprise Co are associated (or correlated) with Ruentex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Industries has no effect on the direction of KNH Enterprise i.e., KNH Enterprise and Ruentex Industries go up and down completely randomly.
Pair Corralation between KNH Enterprise and Ruentex Industries
Assuming the 90 days trading horizon KNH Enterprise Co is expected to under-perform the Ruentex Industries. But the stock apears to be less risky and, when comparing its historical volatility, KNH Enterprise Co is 1.31 times less risky than Ruentex Industries. The stock trades about -0.11 of its potential returns per unit of risk. The Ruentex Industries is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,920 in Ruentex Industries on September 5, 2024 and sell it today you would lose (130.00) from holding Ruentex Industries or give up 1.64% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
KNH Enterprise Co vs. Ruentex Industries
Performance |
Timeline |
KNH Enterprise |
Ruentex Industries |
KNH Enterprise and Ruentex Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KNH Enterprise and Ruentex Industries
The main advantage of trading using opposite KNH Enterprise and Ruentex Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNH Enterprise position performs unexpectedly, Ruentex Industries 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 Industries will offset losses from the drop in Ruentex Industries' long position.KNH Enterprise vs. Universal | KNH Enterprise vs. Taiwan Hon Chuan | KNH Enterprise vs. Adimmune Corp | KNH Enterprise vs. Merida Industry 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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