Correlation Between Rongsheng Petrochemical and Xiamen Jihong
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Xiamen Jihong Package, you can compare the effects of market volatilities on Rongsheng Petrochemical and Xiamen Jihong 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 Xiamen Jihong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Xiamen Jihong.
Diversification Opportunities for Rongsheng Petrochemical and Xiamen Jihong
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rongsheng and Xiamen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Xiamen Jihong Package in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Jihong Package 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 Xiamen Jihong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Jihong Package has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Xiamen Jihong go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Xiamen Jihong
Assuming the 90 days trading horizon Rongsheng Petrochemical Co is expected to generate 0.49 times more return on investment than Xiamen Jihong. However, Rongsheng Petrochemical Co is 2.06 times less risky than Xiamen Jihong. It trades about -0.08 of its potential returns per unit of risk. Xiamen Jihong Package is currently generating about -0.14 per unit of risk. If you would invest 907.00 in Rongsheng Petrochemical Co on October 23, 2024 and sell it today you would lose (22.00) from holding Rongsheng Petrochemical Co or give up 2.43% 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. Xiamen Jihong Package
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Xiamen Jihong Package |
Rongsheng Petrochemical and Xiamen Jihong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Xiamen Jihong
The main advantage of trading using opposite Rongsheng Petrochemical and Xiamen Jihong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Xiamen Jihong 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 Xiamen Jihong will offset losses from the drop in Xiamen Jihong's long position.The idea behind Rongsheng Petrochemical Co and Xiamen Jihong Package 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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