Correlation Between Rongsheng Petrochemical and Do Fluoride
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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 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Do Fluoride.
Diversification Opportunities for Rongsheng Petrochemical and Do Fluoride
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rongsheng and 002407 is 0.79. 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. 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 go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Do Fluoride
Assuming the 90 days trading horizon Rongsheng Petrochemical Co is expected to generate 0.75 times more return on investment than Do Fluoride. However, Rongsheng Petrochemical Co is 1.34 times less risky than Do Fluoride. It trades about -0.22 of its potential returns per unit of risk. Do Fluoride Chemicals Co is currently generating about -0.4 per unit of risk. If you would invest 922.00 in Rongsheng Petrochemical Co on October 25, 2024 and sell it today you would lose (62.00) from holding Rongsheng Petrochemical Co or give up 6.72% 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. Do Fluoride Chemicals Co
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Do Fluoride Chemicals |
Rongsheng Petrochemical and Do Fluoride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Do Fluoride
The main advantage of trading using opposite Rongsheng Petrochemical and Do Fluoride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Do Fluoride 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 will offset losses from the drop in Do Fluoride's long position.The idea behind Rongsheng Petrochemical Co and Do Fluoride Chemicals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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