Correlation Between Shandong Polymer and China Telecom
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By analyzing existing cross correlation between Shandong Polymer Biochemicals and China Telecom Corp, you can compare the effects of market volatilities on Shandong Polymer and China Telecom 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 Polymer with a short position of China Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Polymer and China Telecom.
Diversification Opportunities for Shandong Polymer and China Telecom
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shandong and China is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Polymer Biochemicals and China Telecom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Telecom Corp and Shandong Polymer 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 Polymer Biochemicals are associated (or correlated) with China Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Telecom Corp has no effect on the direction of Shandong Polymer i.e., Shandong Polymer and China Telecom go up and down completely randomly.
Pair Corralation between Shandong Polymer and China Telecom
Assuming the 90 days trading horizon Shandong Polymer Biochemicals is expected to under-perform the China Telecom. In addition to that, Shandong Polymer is 2.39 times more volatile than China Telecom Corp. It trades about -0.31 of its total potential returns per unit of risk. China Telecom Corp is currently generating about 0.12 per unit of volatility. If you would invest 679.00 in China Telecom Corp on October 14, 2024 and sell it today you would earn a total of 19.00 from holding China Telecom Corp or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Polymer Biochemicals vs. China Telecom Corp
Performance |
| Timeline |
| Shandong Polymer Bio |
| China Telecom Corp |
Shandong Polymer and China Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Polymer and China Telecom
The main advantage of trading using opposite Shandong Polymer and China Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Polymer position performs unexpectedly, China Telecom 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 Telecom will offset losses from the drop in China Telecom's long position.The idea behind Shandong Polymer Biochemicals and China Telecom Corp 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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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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