Correlation Between Rongsheng Petrochemical and Guangdong Jingyi
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Guangdong Jingyi Metal, you can compare the effects of market volatilities on Rongsheng Petrochemical and Guangdong Jingyi 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 Guangdong Jingyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Guangdong Jingyi.
Diversification Opportunities for Rongsheng Petrochemical and Guangdong Jingyi
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rongsheng and Guangdong is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Guangdong Jingyi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Jingyi Metal 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 Guangdong Jingyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Jingyi Metal has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Guangdong Jingyi go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Guangdong Jingyi
Assuming the 90 days trading horizon Rongsheng Petrochemical Co is expected to under-perform the Guangdong Jingyi. But the stock apears to be less risky and, when comparing its historical volatility, Rongsheng Petrochemical Co is 1.39 times less risky than Guangdong Jingyi. The stock trades about 0.0 of its potential returns per unit of risk. The Guangdong Jingyi Metal is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 519.00 in Guangdong Jingyi Metal on November 4, 2024 and sell it today you would earn a total of 210.00 from holding Guangdong Jingyi Metal or generate 40.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rongsheng Petrochemical Co vs. Guangdong Jingyi Metal
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Guangdong Jingyi Metal |
Rongsheng Petrochemical and Guangdong Jingyi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Guangdong Jingyi
The main advantage of trading using opposite Rongsheng Petrochemical and Guangdong Jingyi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Guangdong Jingyi 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 Guangdong Jingyi will offset losses from the drop in Guangdong Jingyi's long position.The idea behind Rongsheng Petrochemical Co and Guangdong Jingyi Metal 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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