Correlation Between Rongsheng Petrochemical and Xinke Material
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Xinke Material, you can compare the effects of market volatilities on Rongsheng Petrochemical and Xinke Material 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 Xinke Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Xinke Material.
Diversification Opportunities for Rongsheng Petrochemical and Xinke Material
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rongsheng and Xinke is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Xinke Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinke Material 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 Xinke Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinke Material has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Xinke Material go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Xinke Material
Assuming the 90 days trading horizon Rongsheng Petrochemical is expected to generate 2.25 times less return on investment than Xinke Material. But when comparing it to its historical volatility, Rongsheng Petrochemical Co is 1.53 times less risky than Xinke Material. It trades about 0.04 of its potential returns per unit of risk. Xinke Material is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 228.00 in Xinke Material on September 1, 2024 and sell it today you would earn a total of 6.00 from holding Xinke Material or generate 2.63% 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. Xinke Material
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Xinke Material |
Rongsheng Petrochemical and Xinke Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Xinke Material
The main advantage of trading using opposite Rongsheng Petrochemical and Xinke Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Xinke Material 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 Xinke Material will offset losses from the drop in Xinke Material'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 |
| Xinke Material vs. Gome Telecom Equipment | Xinke Material vs. Eastern Communications Co | Xinke Material vs. Tongyu Communication | Xinke Material vs. Everdisplay Optronics Shanghai |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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