Correlation Between Ruentex Engineering and Te Chang

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

By analyzing existing cross correlation between Ruentex Engineering Construction and Te Chang Construction, you can compare the effects of market volatilities on Ruentex Engineering and Te Chang 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 Engineering with a short position of Te Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Engineering and Te Chang.

Diversification Opportunities for Ruentex Engineering and Te Chang

0.18

Correlation Coefficient

Ruentex Engineering  Te Chang

Average diversification

The 3 months correlation between Ruentex and 5511 is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Engineering Constructi and Te Chang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Te Chang Construction and Ruentex Engineering 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 Engineering Construction are associated (or correlated) with Te Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Te Chang Construction has no effect on the direction of Ruentex Engineering i.e., Ruentex Engineering and Te Chang go up and down completely randomly.

Pair Corralation between Ruentex Engineering and Te Chang

Assuming the 90 days trading horizon Ruentex Engineering is expected to generate 5.16 times less return on investment than Te Chang. In addition to that, Ruentex Engineering is 1.48 times more volatile than Te Chang Construction. It trades about 0.02 of its total potential returns per unit of risk. Te Chang Construction is currently generating about 0.14 per unit of volatility. If you would invest  5,700  in Te Chang Construction on September 24, 2024 and sell it today you would earn a total of  510.00  from holding Te Chang Construction or generate 8.95% return on investment over 90 days.

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

Ruentex Engineering Constructi  vs.  Te Chang Construction

Ruentex Engineering

Risk-Adjusted Performance

1 of 100

Weak

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

Te Chang Construction

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Te Chang Construction are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Te Chang may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ruentex Engineering and Te Chang

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

The idea behind Ruentex Engineering Construction and Te Chang Construction 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.