Correlation Between Rongsheng Petrochemical and Chongqing Shunbo
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Chongqing Shunbo Aluminum, you can compare the effects of market volatilities on Rongsheng Petrochemical and Chongqing Shunbo 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 Chongqing Shunbo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Chongqing Shunbo.
Diversification Opportunities for Rongsheng Petrochemical and Chongqing Shunbo
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Rongsheng and Chongqing is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Chongqing Shunbo Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Shunbo Aluminum 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 Chongqing Shunbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Shunbo Aluminum has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Chongqing Shunbo go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Chongqing Shunbo
Assuming the 90 days trading horizon Rongsheng Petrochemical is expected to generate 2.61 times less return on investment than Chongqing Shunbo. But when comparing it to its historical volatility, Rongsheng Petrochemical Co is 1.4 times less risky than Chongqing Shunbo. It trades about 0.04 of its potential returns per unit of risk. Chongqing Shunbo Aluminum is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 648.00 in Chongqing Shunbo Aluminum on September 1, 2024 and sell it today you would earn a total of 21.00 from holding Chongqing Shunbo Aluminum or generate 3.24% 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. Chongqing Shunbo Aluminum
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Chongqing Shunbo Aluminum |
Rongsheng Petrochemical and Chongqing Shunbo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Chongqing Shunbo
The main advantage of trading using opposite Rongsheng Petrochemical and Chongqing Shunbo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Chongqing Shunbo 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 Chongqing Shunbo will offset losses from the drop in Chongqing Shunbo'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 |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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