Correlation Between Digital China and Rongsheng Petrochemical
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By analyzing existing cross correlation between Digital China Information and Rongsheng Petrochemical Co, you can compare the effects of market volatilities on Digital China and Rongsheng Petrochemical 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 Digital China with a short position of Rongsheng Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital China and Rongsheng Petrochemical.
Diversification Opportunities for Digital China and Rongsheng Petrochemical
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Digital and Rongsheng is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Digital China Information and Rongsheng Petrochemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rongsheng Petrochemical and Digital China 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 Digital China Information are associated (or correlated) with Rongsheng Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rongsheng Petrochemical has no effect on the direction of Digital China i.e., Digital China and Rongsheng Petrochemical go up and down completely randomly.
Pair Corralation between Digital China and Rongsheng Petrochemical
Assuming the 90 days trading horizon Digital China Information is expected to generate 2.23 times more return on investment than Rongsheng Petrochemical. However, Digital China is 2.23 times more volatile than Rongsheng Petrochemical Co. It trades about 0.12 of its potential returns per unit of risk. Rongsheng Petrochemical Co is currently generating about -0.06 per unit of risk. If you would invest 1,297 in Digital China Information on September 13, 2024 and sell it today you would earn a total of 110.00 from holding Digital China Information or generate 8.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital China Information vs. Rongsheng Petrochemical Co
Performance |
| Timeline |
| Digital China Information |
| Rongsheng Petrochemical |
Digital China and Rongsheng Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital China and Rongsheng Petrochemical
The main advantage of trading using opposite Digital China and Rongsheng Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital China position performs unexpectedly, Rongsheng Petrochemical 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 Rongsheng Petrochemical will offset losses from the drop in Rongsheng Petrochemical's long position.| Digital China vs. China Petroleum Chemical | Digital China vs. PetroChina Co Ltd | Digital China vs. China State Construction | Digital China vs. China Railway Group |
| Rongsheng Petrochemical vs. Zijin Mining Group | Rongsheng Petrochemical vs. Wanhua Chemical Group | Rongsheng Petrochemical vs. Baoshan Iron Steel | Rongsheng Petrochemical vs. Shandong Gold Mining |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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