Correlation Between Sun Race and Ruentex Development

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

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

Diversification Opportunities for Sun Race and Ruentex Development

0.69

Correlation Coefficient

Sun Race  Ruentex Development

Poor diversification

The 3 months correlation between Sun and Ruentex is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sun Race Sturmey Archer and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development and Sun Race 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 Sun Race Sturmey Archer 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 Sun Race i.e., Sun Race and Ruentex Development go up and down completely randomly.

Pair Corralation between Sun Race and Ruentex Development

Assuming the 90 days trading horizon Sun Race Sturmey Archer is expected to under-perform the Ruentex Development. But the stock apears to be less risky and, when comparing its historical volatility, Sun Race Sturmey Archer is 1.1 times less risky than Ruentex Development. The stock trades about -0.07 of its potential returns per unit of risk. The Ruentex Development Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,595  in Ruentex Development Co on October 22, 2024 and sell it today you would earn a total of  580.00  from holding Ruentex Development Co or generate 16.13% return on investment over 90 days.

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

Sun Race Sturmey Archer  vs.  Ruentex Development Co

Sun Race Sturmey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Race Sturmey Archer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Ruentex Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ruentex Development Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Sun Race and Ruentex Development

The main advantage of trading using opposite Sun Race and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Race 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.

The idea behind Sun Race Sturmey Archer and Ruentex Development Co 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.