Correlation Between Rongsheng Petrochemical and Sichuan Jinshi
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Sichuan Jinshi Technology, you can compare the effects of market volatilities on Rongsheng Petrochemical and Sichuan Jinshi 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 Sichuan Jinshi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Sichuan Jinshi.
Diversification Opportunities for Rongsheng Petrochemical and Sichuan Jinshi
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rongsheng and Sichuan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Sichuan Jinshi Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Jinshi Technology 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 Sichuan Jinshi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Jinshi Technology has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Sichuan Jinshi go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Sichuan Jinshi
Assuming the 90 days trading horizon Rongsheng Petrochemical Co is expected to under-perform the Sichuan Jinshi. But the stock apears to be less risky and, when comparing its historical volatility, Rongsheng Petrochemical Co is 1.56 times less risky than Sichuan Jinshi. The stock trades about -0.03 of its potential returns per unit of risk. The Sichuan Jinshi Technology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 896.00 in Sichuan Jinshi Technology on August 31, 2024 and sell it today you would lose (183.00) from holding Sichuan Jinshi Technology or give up 20.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
Rongsheng Petrochemical Co vs. Sichuan Jinshi Technology
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Sichuan Jinshi Technology |
Rongsheng Petrochemical and Sichuan Jinshi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Sichuan Jinshi
The main advantage of trading using opposite Rongsheng Petrochemical and Sichuan Jinshi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Sichuan Jinshi 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 Sichuan Jinshi will offset losses from the drop in Sichuan Jinshi's long position.The idea behind Rongsheng Petrochemical Co and Sichuan Jinshi Technology 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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