Correlation Between Ruentex Development and Sunfar Computer

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

Diversification Opportunities for Ruentex Development and Sunfar Computer

0.68

Correlation Coefficient

Ruentex Development  Sunfar Computer

Poor diversification

The 3 months correlation between Ruentex and Sunfar is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Sunfar Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunfar Computer 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 Sunfar Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunfar Computer has no effect on the direction of Ruentex Development i.e., Ruentex Development and Sunfar Computer go up and down completely randomly.

Pair Corralation between Ruentex Development and Sunfar Computer

Assuming the 90 days trading horizon Ruentex Development Co is expected to generate 2.16 times more return on investment than Sunfar Computer. However, Ruentex Development is 2.16 times more volatile than Sunfar Computer Co. It trades about 0.02 of its potential returns per unit of risk. Sunfar Computer Co is currently generating about 0.0 per unit of risk. If you would invest  3,835  in Ruentex Development Co on October 5, 2024 and sell it today you would earn a total of  430.00  from holding Ruentex Development Co or generate 11.21% 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.  Sunfar Computer 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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Sunfar Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunfar Computer Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunfar Computer 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 Sunfar Computer

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

The idea behind Ruentex Development Co and Sunfar Computer 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.