Correlation Between Ruentex Materials and Wayi International

Can any of the company-specific risk be diversified away by investing in both Ruentex Materials and Wayi International 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 Wayi International 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 Wayi International Digital, you can compare the effects of market volatilities on Ruentex Materials and Wayi International 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 Wayi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Materials and Wayi International.

Diversification Opportunities for Ruentex Materials and Wayi International

0.79

Correlation Coefficient

Ruentex Materials  Wayi International

Poor diversification

The 3 months correlation between Ruentex and Wayi is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Materials Co and Wayi International Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayi International 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 Wayi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayi International has no effect on the direction of Ruentex Materials i.e., Ruentex Materials and Wayi International go up and down completely randomly.

Pair Corralation between Ruentex Materials and Wayi International

Assuming the 90 days trading horizon Ruentex Materials Co is expected to generate 0.32 times more return on investment than Wayi International. However, Ruentex Materials Co is 3.13 times less risky than Wayi International. It trades about -0.01 of its potential returns per unit of risk. Wayi International Digital is currently generating about -0.13 per unit of risk. If you would invest  2,665  in Ruentex Materials Co on September 12, 2024 and sell it today you would lose (30.00) from holding Ruentex Materials Co or give up 1.13% of portfolio value over 90 days.

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

Ruentex Materials Co  vs.  Wayi International Digital

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.

Wayi International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wayi International Digital 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ruentex Materials and Wayi International

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

The idea behind Ruentex Materials Co and Wayi International Digital 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.