Correlation Between BenQ Materials and Ruentex Materials

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

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

Diversification Opportunities for BenQ Materials and Ruentex Materials

-0.58

Correlation Coefficient

BenQ Materials  Ruentex Materials

Excellent diversification

The 3 months correlation between BenQ and Ruentex is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Materials Corp and Ruentex Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Materials and BenQ Materials 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 BenQ Materials Corp are associated (or correlated) with Ruentex Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Materials has no effect on the direction of BenQ Materials i.e., BenQ Materials and Ruentex Materials go up and down completely randomly.

Pair Corralation between BenQ Materials and Ruentex Materials

Assuming the 90 days trading horizon BenQ Materials Corp is expected to under-perform the Ruentex Materials. In addition to that, BenQ Materials is 1.0 times more volatile than Ruentex Materials Co. It trades about 0.0 of its total potential returns per unit of risk. Ruentex Materials Co is currently generating about 0.01 per unit of volatility. If you would invest  2,640  in Ruentex Materials Co on September 14, 2024 and sell it today you would lose (10.00) from holding Ruentex Materials Co or give up 0.38% of portfolio value over 90 days.

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

BenQ Materials Corp  vs.  Ruentex Materials Co

BenQ Materials Corp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BenQ Materials Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, BenQ Materials is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ruentex Materials

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BenQ Materials and Ruentex Materials

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

The idea behind BenQ Materials Corp and Ruentex Materials Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.