Correlation Between Rongsheng Petrochemical and Aba Chemicals
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Aba Chemicals Corp, you can compare the effects of market volatilities on Rongsheng Petrochemical and Aba Chemicals 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 Aba Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Aba Chemicals.
Diversification Opportunities for Rongsheng Petrochemical and Aba Chemicals
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rongsheng and Aba is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Aba Chemicals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aba Chemicals Corp 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 Aba Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aba Chemicals Corp has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Aba Chemicals go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Aba Chemicals
Assuming the 90 days trading horizon Rongsheng Petrochemical is expected to generate 4.3 times less return on investment than Aba Chemicals. But when comparing it to its historical volatility, Rongsheng Petrochemical Co is 2.46 times less risky than Aba Chemicals. It trades about 0.09 of its potential returns per unit of risk. Aba Chemicals Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 535.00 in Aba Chemicals Corp on September 2, 2024 and sell it today you would earn a total of 265.00 from holding Aba Chemicals Corp or generate 49.53% 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. Aba Chemicals Corp
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Aba Chemicals Corp |
Rongsheng Petrochemical and Aba Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Aba Chemicals
The main advantage of trading using opposite Rongsheng Petrochemical and Aba Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Aba Chemicals 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 Aba Chemicals will offset losses from the drop in Aba Chemicals' 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 |
| Aba Chemicals vs. Zijin Mining Group | Aba Chemicals vs. Wanhua Chemical Group | Aba Chemicals vs. Baoshan Iron Steel | Aba Chemicals 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 Stocks Directory module to find actively traded stocks across global markets.
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