Correlation Between Ruentex Development and Fuh Hwa

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

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

Diversification Opportunities for Ruentex Development and Fuh Hwa

-0.21

Correlation Coefficient

Ruentex Development  Fuh Hwa

Very good diversification

The 3 months correlation between Ruentex and Fuh is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Fuh Hwa Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuh Hwa Emerging and Ruentex Development 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 Development Co are associated (or correlated) with Fuh Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuh Hwa Emerging has no effect on the direction of Ruentex Development i.e., Ruentex Development and Fuh Hwa go up and down completely randomly.

Pair Corralation between Ruentex Development and Fuh Hwa

Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the Fuh Hwa. In addition to that, Ruentex Development is 3.5 times more volatile than Fuh Hwa Emerging. It trades about -0.18 of its total potential returns per unit of risk. Fuh Hwa Emerging is currently generating about 0.08 per unit of volatility. If you would invest  1,600  in Fuh Hwa Emerging on December 30, 2024 and sell it today you would earn a total of  38.00  from holding Fuh Hwa Emerging or generate 2.38% return on investment over 90 days.

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

Ruentex Development Co  vs.  Fuh Hwa Emerging

Ruentex Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ruentex Development Co 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Fuh Hwa Emerging

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fuh Hwa Emerging are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fuh Hwa is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ruentex Development and Fuh Hwa

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

The idea behind Ruentex Development Co and Fuh Hwa Emerging 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.