Correlation Between Rongsheng Petrochemical and Nantong Jiangshan
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Nantong Jiangshan Agrochemical, you can compare the effects of market volatilities on Rongsheng Petrochemical and Nantong Jiangshan 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 Nantong Jiangshan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Nantong Jiangshan.
Diversification Opportunities for Rongsheng Petrochemical and Nantong Jiangshan
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rongsheng and Nantong is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Nantong Jiangshan Agrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantong Jiangshan 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 Nantong Jiangshan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantong Jiangshan has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Nantong Jiangshan go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Nantong Jiangshan
Assuming the 90 days trading horizon Rongsheng Petrochemical is expected to generate 15.62 times less return on investment than Nantong Jiangshan. But when comparing it to its historical volatility, Rongsheng Petrochemical Co is 1.45 times less risky than Nantong Jiangshan. It trades about 0.02 of its potential returns per unit of risk. Nantong Jiangshan Agrochemical is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,377 in Nantong Jiangshan Agrochemical on August 25, 2024 and sell it today you would earn a total of 171.00 from holding Nantong Jiangshan Agrochemical or generate 12.42% 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. Nantong Jiangshan Agrochemical
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Nantong Jiangshan |
Rongsheng Petrochemical and Nantong Jiangshan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Nantong Jiangshan
The main advantage of trading using opposite Rongsheng Petrochemical and Nantong Jiangshan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Nantong Jiangshan 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 Nantong Jiangshan will offset losses from the drop in Nantong Jiangshan's long position.| Rongsheng Petrochemical vs. Zijin Mining Group | Rongsheng Petrochemical vs. Wanhua Chemical Group | Rongsheng Petrochemical vs. Shandong Gold Mining | Rongsheng Petrochemical vs. Inner Mongolia BaoTou |
| Nantong Jiangshan vs. Zijin Mining Group | Nantong Jiangshan vs. Wanhua Chemical Group | Nantong Jiangshan vs. Shandong Gold Mining | Nantong Jiangshan vs. Inner Mongolia BaoTou |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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