Correlation Between LK Engineering and Ruentex Engineering

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

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

Diversification Opportunities for LK Engineering and Ruentex Engineering

0.0

Correlation Coefficient

LK Engineering  Ruentex Engineering

Pay attention - limited upside

The 3 months correlation between 6139 and Ruentex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LK Engineering Co and Ruentex Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Engineering and LK 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 LK Engineering Co 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 LK Engineering i.e., LK Engineering and Ruentex Engineering go up and down completely randomly.

Pair Corralation between LK Engineering and Ruentex Engineering

If you would invest (100.00) in LK Engineering Co on October 26, 2024 and sell it today you would earn a total of  100.00  from holding LK Engineering Co or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LK Engineering Co  vs.  Ruentex Engineering Constructi

LK Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LK Engineering Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, LK Engineering is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the 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 LK Engineering and Ruentex Engineering

The main advantage of trading using opposite LK Engineering and Ruentex Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LK Engineering 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 LK Engineering Co 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.