Correlation Between Rongsheng Petrochemical and Sinomach Automobile
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Sinomach Automobile Co, you can compare the effects of market volatilities on Rongsheng Petrochemical and Sinomach Automobile 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 Sinomach Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Sinomach Automobile.
Diversification Opportunities for Rongsheng Petrochemical and Sinomach Automobile
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Rongsheng and Sinomach is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Sinomach Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinomach Automobile 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 Sinomach Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinomach Automobile has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Sinomach Automobile go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Sinomach Automobile
Assuming the 90 days trading horizon Rongsheng Petrochemical Co is expected to generate 0.69 times more return on investment than Sinomach Automobile. However, Rongsheng Petrochemical Co is 1.44 times less risky than Sinomach Automobile. It trades about -0.03 of its potential returns per unit of risk. Sinomach Automobile Co is currently generating about -0.04 per unit of risk. If you would invest 965.00 in Rongsheng Petrochemical Co on August 29, 2024 and sell it today you would lose (13.00) from holding Rongsheng Petrochemical Co or give up 1.35% 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. Sinomach Automobile Co
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Sinomach Automobile |
Rongsheng Petrochemical and Sinomach Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Sinomach Automobile
The main advantage of trading using opposite Rongsheng Petrochemical and Sinomach Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Sinomach Automobile 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 Sinomach Automobile will offset losses from the drop in Sinomach Automobile's long position.The idea behind Rongsheng Petrochemical Co and Sinomach Automobile Co 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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