Correlation Between Rongsheng Petrochemical and Tianjin Silvery
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Tianjin Silvery Dragon, you can compare the effects of market volatilities on Rongsheng Petrochemical and Tianjin Silvery 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 Tianjin Silvery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Tianjin Silvery.
Diversification Opportunities for Rongsheng Petrochemical and Tianjin Silvery
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rongsheng and Tianjin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Tianjin Silvery Dragon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Silvery Dragon 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 Tianjin Silvery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Silvery Dragon has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Tianjin Silvery go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Tianjin Silvery
Assuming the 90 days trading horizon Rongsheng Petrochemical is expected to generate 4.63 times less return on investment than Tianjin Silvery. But when comparing it to its historical volatility, Rongsheng Petrochemical Co is 2.07 times less risky than Tianjin Silvery. It trades about 0.04 of its potential returns per unit of risk. Tianjin Silvery Dragon is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 551.00 in Tianjin Silvery Dragon on August 31, 2024 and sell it today you would earn a total of 31.00 from holding Tianjin Silvery Dragon or generate 5.63% 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. Tianjin Silvery Dragon
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Tianjin Silvery Dragon |
Rongsheng Petrochemical and Tianjin Silvery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Tianjin Silvery
The main advantage of trading using opposite Rongsheng Petrochemical and Tianjin Silvery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Tianjin Silvery 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 Tianjin Silvery will offset losses from the drop in Tianjin Silvery's long position.The idea behind Rongsheng Petrochemical Co and Tianjin Silvery Dragon 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.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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