Correlation Between Maoming Petro and Beijing Lier
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By analyzing existing cross correlation between Maoming Petro Chemical Shihua and Beijing Lier High, you can compare the effects of market volatilities on Maoming Petro and Beijing Lier 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 Maoming Petro with a short position of Beijing Lier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maoming Petro and Beijing Lier.
Diversification Opportunities for Maoming Petro and Beijing Lier
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Maoming and Beijing is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Maoming Petro Chemical Shihua and Beijing Lier High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Lier High and Maoming Petro 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 Maoming Petro Chemical Shihua are associated (or correlated) with Beijing Lier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Lier High has no effect on the direction of Maoming Petro i.e., Maoming Petro and Beijing Lier go up and down completely randomly.
Pair Corralation between Maoming Petro and Beijing Lier
Assuming the 90 days trading horizon Maoming Petro is expected to generate 2.07 times less return on investment than Beijing Lier. But when comparing it to its historical volatility, Maoming Petro Chemical Shihua is 1.49 times less risky than Beijing Lier. It trades about 0.2 of its potential returns per unit of risk. Beijing Lier High is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 382.00 in Beijing Lier High on September 4, 2024 and sell it today you would earn a total of 98.00 from holding Beijing Lier High or generate 25.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maoming Petro Chemical Shihua vs. Beijing Lier High
Performance |
| Timeline |
| Maoming Petro Chemical |
| Beijing Lier High |
Maoming Petro and Beijing Lier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maoming Petro and Beijing Lier
The main advantage of trading using opposite Maoming Petro and Beijing Lier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maoming Petro position performs unexpectedly, Beijing Lier 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 Beijing Lier will offset losses from the drop in Beijing Lier's long position.| Maoming Petro vs. Zijin Mining Group | Maoming Petro vs. Wanhua Chemical Group | Maoming Petro vs. Baoshan Iron Steel | Maoming Petro vs. Shandong Gold Mining |
| Beijing Lier vs. Shanghai Action Education | Beijing Lier vs. Chinese Universe Publishing | Beijing Lier vs. Heilongjiang Publishing Media | Beijing Lier vs. Shanghai Metersbonwe FashionAccessories |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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