Correlation Between Shandong Xinhua and China Petroleum
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By analyzing existing cross correlation between Shandong Xinhua Pharmaceutical and China Petroleum Chemical, you can compare the effects of market volatilities on Shandong Xinhua and China Petroleum 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 Shandong Xinhua with a short position of China Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Xinhua and China Petroleum.
Diversification Opportunities for Shandong Xinhua and China Petroleum
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shandong and China is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Xinhua Pharmaceutical and China Petroleum Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petroleum Chemical and Shandong Xinhua 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 Shandong Xinhua Pharmaceutical are associated (or correlated) with China Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petroleum Chemical has no effect on the direction of Shandong Xinhua i.e., Shandong Xinhua and China Petroleum go up and down completely randomly.
Pair Corralation between Shandong Xinhua and China Petroleum
Assuming the 90 days trading horizon Shandong Xinhua Pharmaceutical is expected to generate 1.4 times more return on investment than China Petroleum. However, Shandong Xinhua is 1.4 times more volatile than China Petroleum Chemical. It trades about 0.01 of its potential returns per unit of risk. China Petroleum Chemical is currently generating about 0.01 per unit of risk. If you would invest 1,620 in Shandong Xinhua Pharmaceutical on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Shandong Xinhua Pharmaceutical or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Xinhua Pharmaceutical vs. China Petroleum Chemical
Performance |
| Timeline |
| Shandong Xinhua Phar |
| China Petroleum Chemical |
Shandong Xinhua and China Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Xinhua and China Petroleum
The main advantage of trading using opposite Shandong Xinhua and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Xinhua position performs unexpectedly, China Petroleum 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 China Petroleum will offset losses from the drop in China Petroleum's long position.| Shandong Xinhua vs. Guangdong Shenglu Telecommunication | Shandong Xinhua vs. Wuxi Chemical Equipment | Shandong Xinhua vs. CICT Mobile Communication | Shandong Xinhua vs. Shaanxi Beiyuan Chemical |
| China Petroleum vs. Eastern Air Logistics | China Petroleum vs. Ningbo Fangzheng Automobile | China Petroleum vs. Xinhua Winshare Publishing | China Petroleum vs. Jiangsu Phoenix Publishing |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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