Correlation Between Rongsheng Petrochemical and Do-Fluoride Chemicals
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Do Fluoride Chemicals Co, you can compare the effects of market volatilities on Rongsheng Petrochemical and Do-Fluoride Chemicals 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 Do-Fluoride Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Do-Fluoride Chemicals.
Diversification Opportunities for Rongsheng Petrochemical and Do-Fluoride Chemicals
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Rongsheng and Do-Fluoride is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Do Fluoride Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Do Fluoride Chemicals 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 Do-Fluoride Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Do Fluoride Chemicals has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Do-Fluoride Chemicals go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Do-Fluoride Chemicals
Assuming the 90 days trading horizon Rongsheng Petrochemical is expected to generate 7.12 times less return on investment than Do-Fluoride Chemicals. But when comparing it to its historical volatility, Rongsheng Petrochemical Co is 2.35 times less risky than Do-Fluoride Chemicals. It trades about 0.04 of its potential returns per unit of risk. Do Fluoride Chemicals Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,215 in Do Fluoride Chemicals Co on September 1, 2024 and sell it today you would earn a total of 110.00 from holding Do Fluoride Chemicals Co or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rongsheng Petrochemical Co vs. Do Fluoride Chemicals Co
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Do Fluoride Chemicals |
Rongsheng Petrochemical and Do-Fluoride Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Do-Fluoride Chemicals
The main advantage of trading using opposite Rongsheng Petrochemical and Do-Fluoride Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Do-Fluoride Chemicals 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 Do-Fluoride Chemicals will offset losses from the drop in Do-Fluoride Chemicals' 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 |
| Do-Fluoride Chemicals vs. Zijin Mining Group | Do-Fluoride Chemicals vs. Wanhua Chemical Group | Do-Fluoride Chemicals vs. Baoshan Iron Steel | Do-Fluoride Chemicals vs. Shandong Gold Mining |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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