Correlation Between Rongsheng Petrochemical and Levima Advanced
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Levima Advanced Materials, you can compare the effects of market volatilities on Rongsheng Petrochemical and Levima Advanced 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 Levima Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Levima Advanced.
Diversification Opportunities for Rongsheng Petrochemical and Levima Advanced
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Rongsheng and Levima is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Levima Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levima Advanced Materials 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 Levima Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levima Advanced Materials has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Levima Advanced go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Levima Advanced
Assuming the 90 days trading horizon Rongsheng Petrochemical Co is expected to under-perform the Levima Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Rongsheng Petrochemical Co is 1.62 times less risky than Levima Advanced. The stock trades about -0.03 of its potential returns per unit of risk. The Levima Advanced Materials is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,930 in Levima Advanced Materials on September 4, 2024 and sell it today you would lose (310.00) from holding Levima Advanced Materials or give up 16.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rongsheng Petrochemical Co vs. Levima Advanced Materials
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Levima Advanced Materials |
Rongsheng Petrochemical and Levima Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Levima Advanced
The main advantage of trading using opposite Rongsheng Petrochemical and Levima Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Levima Advanced 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 Levima Advanced will offset losses from the drop in Levima Advanced'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 |
| Levima Advanced vs. Zijin Mining Group | Levima Advanced vs. Wanhua Chemical Group | Levima Advanced vs. Baoshan Iron Steel | Levima Advanced vs. Shandong Gold Mining |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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