Correlation Between Ruentex Development and ADLINK Technology

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

Diversification Opportunities for Ruentex Development and ADLINK Technology

-0.57

Correlation Coefficient

Ruentex Development  ADLINK Technology

Excellent diversification

The 3 months correlation between Ruentex and ADLINK is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and ADLINK Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADLINK Technology 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 ADLINK Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADLINK Technology has no effect on the direction of Ruentex Development i.e., Ruentex Development and ADLINK Technology go up and down completely randomly.

Pair Corralation between Ruentex Development and ADLINK Technology

Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the ADLINK Technology. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Development Co is 1.4 times less risky than ADLINK Technology. The stock trades about -0.05 of its potential returns per unit of risk. The ADLINK Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,890  in ADLINK Technology on September 16, 2024 and sell it today you would earn a total of  510.00  from holding ADLINK Technology or generate 7.4% return on investment over 90 days.

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

Ruentex Development Co  vs.  ADLINK Technology

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.

ADLINK Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADLINK Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ADLINK Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ruentex Development and ADLINK Technology

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

The idea behind Ruentex Development Co and ADLINK Technology 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.