Correlation Between Ruentex Development and YuantaP Shares

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

By analyzing existing cross correlation between Ruentex Development Co and YuantaP shares SSE50, you can compare the effects of market volatilities on Ruentex Development and YuantaP Shares 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 Development with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and YuantaP Shares.

Diversification Opportunities for Ruentex Development and YuantaP Shares

0.24

Correlation Coefficient

Ruentex Development  YuantaP Shares

Modest diversification

The 3 months correlation between Ruentex and YuantaP is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and YuantaP shares SSE50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares SSE50 and Ruentex Development 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 Development Co are associated (or correlated) with YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares SSE50 has no effect on the direction of Ruentex Development i.e., Ruentex Development and YuantaP Shares go up and down completely randomly.

Pair Corralation between Ruentex Development and YuantaP Shares

Assuming the 90 days trading horizon Ruentex Development is expected to generate 13.87 times less return on investment than YuantaP Shares. But when comparing it to its historical volatility, Ruentex Development Co is 2.07 times less risky than YuantaP Shares. It trades about 0.02 of its potential returns per unit of risk. YuantaP shares SSE50 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,693  in YuantaP shares SSE50 on September 8, 2024 and sell it today you would earn a total of  443.00  from holding YuantaP shares SSE50 or generate 16.45% return on investment over 90 days.

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

Ruentex Development Co  vs.  YuantaP shares SSE50

Ruentex Development

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ruentex Development Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Ruentex Development is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

YuantaP shares SSE50

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares SSE50 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, YuantaP Shares sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ruentex Development and YuantaP Shares

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

The idea behind Ruentex Development Co and YuantaP shares SSE50 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.