Correlation Between Ruentex Development and Bank of Kaohsiung
Can any of the company-specific risk be diversified away by investing in both Ruentex Development and Bank of Kaohsiung 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 Bank of Kaohsiung 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 Bank of Kaohsiung, you can compare the effects of market volatilities on Ruentex Development and Bank of Kaohsiung 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 Bank of Kaohsiung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ruentex Development and Bank of Kaohsiung.
Diversification Opportunities for Ruentex Development and Bank of Kaohsiung
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ruentex and Bank is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Bank of Kaohsiung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Kaohsiung 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 Bank of Kaohsiung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Kaohsiung has no effect on the direction of Ruentex Development i.e., Ruentex Development and Bank of Kaohsiung go up and down completely randomly.
Pair Corralation between Ruentex Development and Bank of Kaohsiung
Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the Bank of Kaohsiung. In addition to that, Ruentex Development is 1.63 times more volatile than Bank of Kaohsiung. It trades about -0.13 of its total potential returns per unit of risk. Bank of Kaohsiung is currently generating about 0.06 per unit of volatility. If you would invest 1,150 in Bank of Kaohsiung on October 22, 2024 and sell it today you would earn a total of 10.00 from holding Bank of Kaohsiung or generate 0.87% 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. Bank of Kaohsiung
Performance |
Timeline |
Ruentex Development |
Bank of Kaohsiung |
Ruentex Development and Bank of Kaohsiung Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ruentex Development and Bank of Kaohsiung
The main advantage of trading using opposite Ruentex Development and Bank of Kaohsiung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ruentex Development position performs unexpectedly, Bank of Kaohsiung 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 Bank of Kaohsiung will offset losses from the drop in Bank of Kaohsiung's long position.Ruentex Development vs. Ruentex Industries | Ruentex Development vs. Pou Chen Corp | Ruentex Development vs. Fubon Financial Holding | Ruentex Development vs. Cathay Financial Holding |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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