Correlation Between Ruentex Materials and Bonny Worldwide

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

Diversification Opportunities for Ruentex Materials and Bonny Worldwide

0.13

Correlation Coefficient

Ruentex Materials  Bonny Worldwide

Average diversification

The 3 months correlation between Ruentex and Bonny is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Materials Co and Bonny Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonny Worldwide 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 Bonny Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonny Worldwide has no effect on the direction of Ruentex Materials i.e., Ruentex Materials and Bonny Worldwide go up and down completely randomly.

Pair Corralation between Ruentex Materials and Bonny Worldwide

Assuming the 90 days trading horizon Ruentex Materials Co is expected to generate 0.31 times more return on investment than Bonny Worldwide. However, Ruentex Materials Co is 3.26 times less risky than Bonny Worldwide. It trades about 0.05 of its potential returns per unit of risk. Bonny Worldwide is currently generating about -0.15 per unit of risk. If you would invest  2,585  in Ruentex Materials Co on December 22, 2024 and sell it today you would earn a total of  65.00  from holding Ruentex Materials Co or generate 2.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Ruentex Materials Co  vs.  Bonny Worldwide

Ruentex Materials

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ruentex Materials Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Bonny Worldwide

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bonny Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 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 Bonny Worldwide

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

The idea behind Ruentex Materials Co and Bonny Worldwide 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.