Correlation Between Shieh Yih and Ruentex Engineering

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

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

Diversification Opportunities for Shieh Yih and Ruentex Engineering

-0.62

Correlation Coefficient

Shieh Yih  Ruentex Engineering

Excellent diversification

The 3 months correlation between Shieh and Ruentex is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shieh Yih Machinery and Ruentex Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Engineering and Shieh Yih 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 Shieh Yih Machinery are associated (or correlated) with Ruentex Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Engineering has no effect on the direction of Shieh Yih i.e., Shieh Yih and Ruentex Engineering go up and down completely randomly.

Pair Corralation between Shieh Yih and Ruentex Engineering

Assuming the 90 days trading horizon Shieh Yih Machinery is expected to generate 1.52 times more return on investment than Ruentex Engineering. However, Shieh Yih is 1.52 times more volatile than Ruentex Engineering Construction. It trades about 0.08 of its potential returns per unit of risk. Ruentex Engineering Construction is currently generating about 0.03 per unit of risk. If you would invest  1,028  in Shieh Yih Machinery on October 22, 2024 and sell it today you would earn a total of  2,227  from holding Shieh Yih Machinery or generate 216.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Shieh Yih Machinery  vs.  Ruentex Engineering Constructi

Shieh Yih Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shieh Yih Machinery 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 Engineering

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ruentex Engineering Construction are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ruentex Engineering may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shieh Yih and Ruentex Engineering

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

The idea behind Shieh Yih Machinery and Ruentex Engineering 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.