Correlation Between Ruentex Industries and TOPBI International

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

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

Diversification Opportunities for Ruentex Industries and TOPBI International

-0.32

Correlation Coefficient

Ruentex Industries  TOPBI International

Very good diversification

The 3 months correlation between Ruentex and TOPBI is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Industries and TOPBI International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPBI International and Ruentex Industries 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 Industries are associated (or correlated) with TOPBI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPBI International has no effect on the direction of Ruentex Industries i.e., Ruentex Industries and TOPBI International go up and down completely randomly.

Pair Corralation between Ruentex Industries and TOPBI International

Assuming the 90 days trading horizon Ruentex Industries is expected to under-perform the TOPBI International. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Industries is 2.29 times less risky than TOPBI International. The stock trades about -0.14 of its potential returns per unit of risk. The TOPBI International Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,280  in TOPBI International Holdings on October 7, 2024 and sell it today you would earn a total of  120.00  from holding TOPBI International Holdings or generate 9.38% return on investment over 90 days.

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

Ruentex Industries  vs.  TOPBI International Holdings

Ruentex Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ruentex Industries 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.

TOPBI International

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TOPBI International Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, TOPBI International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ruentex Industries and TOPBI International

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

The idea behind Ruentex Industries and TOPBI International Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.