Correlation Between China Petrochemical and Chia Hsin
Can any of the company-specific risk be diversified away by investing in both China Petrochemical and Chia Hsin at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining China Petrochemical and Chia Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Petrochemical Development and Chia Hsin Cement, you can compare the effects of market volatilities on China Petrochemical and Chia Hsin 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 China Petrochemical with a short position of Chia Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petrochemical and Chia Hsin.
Diversification Opportunities for China Petrochemical and Chia Hsin
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Chia is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding China Petrochemical Developmen and Chia Hsin Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Hsin Cement and China 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 China Petrochemical Development are associated (or correlated) with Chia Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Hsin Cement has no effect on the direction of China Petrochemical i.e., China Petrochemical and Chia Hsin go up and down completely randomly.
Pair Corralation between China Petrochemical and Chia Hsin
Assuming the 90 days trading horizon China Petrochemical Development is expected to under-perform the Chia Hsin. In addition to that, China Petrochemical is 1.18 times more volatile than Chia Hsin Cement. It trades about -0.03 of its total potential returns per unit of risk. Chia Hsin Cement is currently generating about 0.01 per unit of volatility. If you would invest 1,730 in Chia Hsin Cement on September 14, 2024 and sell it today you would earn a total of 50.00 from holding Chia Hsin Cement or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
China Petrochemical Developmen vs. Chia Hsin Cement
Performance |
| Timeline |
| China Petrochemical |
| Chia Hsin Cement |
China Petrochemical and Chia Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petrochemical and Chia Hsin
The main advantage of trading using opposite China Petrochemical and Chia Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petrochemical position performs unexpectedly, Chia Hsin 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 Chia Hsin will offset losses from the drop in Chia Hsin's long position.| China Petrochemical vs. Tainan Spinning Co | China Petrochemical vs. Lealea Enterprise Co | China Petrochemical vs. Ruentex Development Co | China Petrochemical vs. WiseChip Semiconductor |
| Chia Hsin vs. Tainan Spinning Co | Chia Hsin vs. Lealea Enterprise Co | Chia Hsin vs. China Petrochemical Development | Chia Hsin vs. Ruentex Development Co |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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