Correlation Between Rongsheng Petrochemical and Yunnan Copper
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Yunnan Copper Co, you can compare the effects of market volatilities on Rongsheng Petrochemical and Yunnan Copper 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 Yunnan Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Yunnan Copper.
Diversification Opportunities for Rongsheng Petrochemical and Yunnan Copper
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rongsheng and Yunnan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Yunnan Copper Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Copper 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 Yunnan Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Copper has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Yunnan Copper go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Yunnan Copper
Assuming the 90 days trading horizon Rongsheng Petrochemical Co is expected to generate 1.03 times more return on investment than Yunnan Copper. However, Rongsheng Petrochemical is 1.03 times more volatile than Yunnan Copper Co. It trades about -0.05 of its potential returns per unit of risk. Yunnan Copper Co is currently generating about -0.08 per unit of risk. If you would invest 922.00 in Rongsheng Petrochemical Co on October 15, 2024 and sell it today you would lose (50.00) from holding Rongsheng Petrochemical Co or give up 5.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rongsheng Petrochemical Co vs. Yunnan Copper Co
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Yunnan Copper |
Rongsheng Petrochemical and Yunnan Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Yunnan Copper
The main advantage of trading using opposite Rongsheng Petrochemical and Yunnan Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Yunnan Copper 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 Yunnan Copper will offset losses from the drop in Yunnan Copper's long position.The idea behind Rongsheng Petrochemical Co and Yunnan Copper Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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