Correlation Between Sun Sea and Ruentex Engineering

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

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

Diversification Opportunities for Sun Sea and Ruentex Engineering

0.4

Correlation Coefficient

Sun Sea  Ruentex Engineering

Very weak diversification

The 3 months correlation between Sun and Ruentex is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sun Sea Construction and Ruentex Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Engineering and Sun Sea 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 Sea Construction 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 Sun Sea i.e., Sun Sea and Ruentex Engineering go up and down completely randomly.

Pair Corralation between Sun Sea and Ruentex Engineering

Assuming the 90 days trading horizon Sun Sea is expected to generate 3.46 times less return on investment than Ruentex Engineering. In addition to that, Sun Sea is 1.29 times more volatile than Ruentex Engineering Construction. It trades about 0.07 of its total potential returns per unit of risk. Ruentex Engineering Construction is currently generating about 0.3 per unit of volatility. If you would invest  14,050  in Ruentex Engineering Construction on September 18, 2024 and sell it today you would earn a total of  1,300  from holding Ruentex Engineering Construction or generate 9.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Sun Sea Construction  vs.  Ruentex Engineering Constructi

Sun Sea Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Sea Construction 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.

Ruentex Engineering

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ruentex Engineering Construction are ranked lower than 5 (%) 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 January 2025.

Pair Trading with Sun Sea and Ruentex Engineering

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

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.