Correlation Between Ruentex Development and Chin Poon

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

Diversification Opportunities for Ruentex Development and Chin Poon

0.6

Correlation Coefficient

Ruentex Development  Chin Poon

Poor diversification

The 3 months correlation between Ruentex and Chin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Chin Poon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chin Poon Industrial 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 Chin Poon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chin Poon Industrial has no effect on the direction of Ruentex Development i.e., Ruentex Development and Chin Poon go up and down completely randomly.

Pair Corralation between Ruentex Development and Chin Poon

Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the Chin Poon. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Development Co is 1.11 times less risky than Chin Poon. The stock trades about -0.11 of its potential returns per unit of risk. The Chin Poon Industrial Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,805  in Chin Poon Industrial Co on September 17, 2024 and sell it today you would earn a total of  110.00  from holding Chin Poon Industrial Co or generate 2.89% return on investment over 90 days.

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

Ruentex Development Co  vs.  Chin Poon Industrial Co

Ruentex Development

Risk-Adjusted Performance

0 of 100

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 fairly stable basic indicators, Ruentex Development is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chin Poon Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chin Poon Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chin Poon 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 Ruentex Development and Chin Poon

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

The idea behind Ruentex Development Co and Chin Poon Industrial 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.