Correlation Between Ruentex Development and Paiho Shih

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

Diversification Opportunities for Ruentex Development and Paiho Shih

0.23

Correlation Coefficient

Ruentex Development  Paiho Shih

Modest diversification

The 3 months correlation between Ruentex and Paiho is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ruentex Development Co and Paiho Shih Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paiho Shih Holdings 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 Paiho Shih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paiho Shih Holdings has no effect on the direction of Ruentex Development i.e., Ruentex Development and Paiho Shih go up and down completely randomly.

Pair Corralation between Ruentex Development and Paiho Shih

Assuming the 90 days trading horizon Ruentex Development Co is expected to under-perform the Paiho Shih. But the stock apears to be less risky and, when comparing its historical volatility, Ruentex Development Co is 1.26 times less risky than Paiho Shih. The stock trades about -0.18 of its potential returns per unit of risk. The Paiho Shih Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,670  in Paiho Shih Holdings on December 29, 2024 and sell it today you would earn a total of  95.00  from holding Paiho Shih Holdings or generate 3.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.25%
Values	Daily Returns

Ruentex Development Co  vs.  Paiho Shih Holdings

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.

Paiho Shih Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Paiho Shih Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Paiho Shih 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 Paiho Shih

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

The idea behind Ruentex Development Co and Paiho Shih Holdings 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.