Correlation Between Rongsheng Petrochemical and Jiaozuo Wanfang
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Jiaozuo Wanfang Aluminum, you can compare the effects of market volatilities on Rongsheng Petrochemical and Jiaozuo Wanfang 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 Rongsheng Petrochemical with a short position of Jiaozuo Wanfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Jiaozuo Wanfang.
Diversification Opportunities for Rongsheng Petrochemical and Jiaozuo Wanfang
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Rongsheng and Jiaozuo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Jiaozuo Wanfang Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiaozuo Wanfang Aluminum and Rongsheng Petrochemical 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 Rongsheng Petrochemical Co are associated (or correlated) with Jiaozuo Wanfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiaozuo Wanfang Aluminum has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Jiaozuo Wanfang go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Jiaozuo Wanfang
Assuming the 90 days trading horizon Rongsheng Petrochemical Co is expected to under-perform the Jiaozuo Wanfang. But the stock apears to be less risky and, when comparing its historical volatility, Rongsheng Petrochemical Co is 1.38 times less risky than Jiaozuo Wanfang. The stock trades about -0.04 of its potential returns per unit of risk. The Jiaozuo Wanfang Aluminum is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 565.00 in Jiaozuo Wanfang Aluminum on October 25, 2024 and sell it today you would earn a total of 149.00 from holding Jiaozuo Wanfang Aluminum or generate 26.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rongsheng Petrochemical Co vs. Jiaozuo Wanfang Aluminum
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Jiaozuo Wanfang Aluminum |
Rongsheng Petrochemical and Jiaozuo Wanfang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Jiaozuo Wanfang
The main advantage of trading using opposite Rongsheng Petrochemical and Jiaozuo Wanfang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Jiaozuo Wanfang 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 Jiaozuo Wanfang will offset losses from the drop in Jiaozuo Wanfang's long position.| Rongsheng Petrochemical vs. Zijin Mining Group | Rongsheng Petrochemical vs. Wanhua Chemical Group | Rongsheng Petrochemical vs. Baoshan Iron Steel | Rongsheng Petrochemical vs. Shandong Gold Mining |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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