Correlation Between Rongsheng Petrochemical and Guizhou Chanhen
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Guizhou Chanhen Chemical, you can compare the effects of market volatilities on Rongsheng Petrochemical and Guizhou Chanhen 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 Guizhou Chanhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Guizhou Chanhen.
Diversification Opportunities for Rongsheng Petrochemical and Guizhou Chanhen
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rongsheng and Guizhou is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Guizhou Chanhen Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guizhou Chanhen Chemical 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 Guizhou Chanhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guizhou Chanhen Chemical has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Guizhou Chanhen go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Guizhou Chanhen
Assuming the 90 days trading horizon Rongsheng Petrochemical is expected to generate 6.36 times less return on investment than Guizhou Chanhen. But when comparing it to its historical volatility, Rongsheng Petrochemical Co is 1.95 times less risky than Guizhou Chanhen. It trades about 0.04 of its potential returns per unit of risk. Guizhou Chanhen Chemical is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,125 in Guizhou Chanhen Chemical on September 1, 2024 and sell it today you would earn a total of 177.00 from holding Guizhou Chanhen Chemical or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rongsheng Petrochemical Co vs. Guizhou Chanhen Chemical
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Guizhou Chanhen Chemical |
Rongsheng Petrochemical and Guizhou Chanhen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Guizhou Chanhen
The main advantage of trading using opposite Rongsheng Petrochemical and Guizhou Chanhen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Guizhou Chanhen 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 Guizhou Chanhen will offset losses from the drop in Guizhou Chanhen's 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 |
| Guizhou Chanhen vs. GKHT Medical Technology | Guizhou Chanhen vs. Shanghai Jinfeng Wine | Guizhou Chanhen vs. Guangdong Qunxing Toys | Guizhou Chanhen vs. Ningbo David Medical |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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