Correlation Between Ruentex Materials and First Copper

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

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

Diversification Opportunities for Ruentex Materials and First Copper

0.28

Correlation Coefficient

Ruentex Materials  First Copper

Modest diversification

The 3 months correlation between Ruentex and First is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Materials Co and First Copper Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Copper Technology and Ruentex 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 Ruentex Materials Co are associated (or correlated) with First Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Copper Technology has no effect on the direction of Ruentex Materials i.e., Ruentex Materials and First Copper go up and down completely randomly.

Pair Corralation between Ruentex Materials and First Copper

Assuming the 90 days trading horizon Ruentex Materials Co is expected to under-perform the First Copper. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Materials Co is 3.62 times less risky than First Copper. The stock trades about -0.1 of its potential returns per unit of risk. The First Copper Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,950  in First Copper Technology on December 4, 2024 and sell it today you would earn a total of  140.00  from holding First Copper Technology or generate 3.54% return on investment over 90 days.

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

Ruentex Materials Co  vs.  First Copper Technology

Ruentex Materials

Risk-Adjusted Performance

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.

First Copper Technology

Risk-Adjusted Performance

Weak

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

Pair Trading with Ruentex Materials and First Copper

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

The idea behind Ruentex Materials Co and First Copper Technology 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.