Correlation Between Rongsheng Petrochemical and Bloomage Biotechnology
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By analyzing existing cross correlation between Rongsheng Petrochemical Co and Bloomage Biotechnology Corp, you can compare the effects of market volatilities on Rongsheng Petrochemical and Bloomage Biotechnology 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 Bloomage Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rongsheng Petrochemical and Bloomage Biotechnology.
Diversification Opportunities for Rongsheng Petrochemical and Bloomage Biotechnology
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rongsheng and Bloomage is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Rongsheng Petrochemical Co and Bloomage Biotechnology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomage Biotechnology 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 Bloomage Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomage Biotechnology has no effect on the direction of Rongsheng Petrochemical i.e., Rongsheng Petrochemical and Bloomage Biotechnology go up and down completely randomly.
Pair Corralation between Rongsheng Petrochemical and Bloomage Biotechnology
Assuming the 90 days trading horizon Rongsheng Petrochemical Co is expected to generate 0.8 times more return on investment than Bloomage Biotechnology. However, Rongsheng Petrochemical Co is 1.25 times less risky than Bloomage Biotechnology. It trades about -0.08 of its potential returns per unit of risk. Bloomage Biotechnology Corp is currently generating about -0.24 per unit of risk. If you would invest 918.00 in Rongsheng Petrochemical Co on October 20, 2024 and sell it today you would lose (22.00) from holding Rongsheng Petrochemical Co or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rongsheng Petrochemical Co vs. Bloomage Biotechnology Corp
Performance |
| Timeline |
| Rongsheng Petrochemical |
| Bloomage Biotechnology |
Rongsheng Petrochemical and Bloomage Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rongsheng Petrochemical and Bloomage Biotechnology
The main advantage of trading using opposite Rongsheng Petrochemical and Bloomage Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rongsheng Petrochemical position performs unexpectedly, Bloomage Biotechnology 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 Bloomage Biotechnology will offset losses from the drop in Bloomage Biotechnology's long position.The idea behind Rongsheng Petrochemical Co and Bloomage Biotechnology Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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