Correlation Between China Petrochemical and Universal Cement
Can any of the company-specific risk be diversified away by investing in both China Petrochemical and Universal Cement 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 Universal Cement 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 Universal Cement Corp, you can compare the effects of market volatilities on China Petrochemical and Universal Cement 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 Universal Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petrochemical and Universal Cement.
Diversification Opportunities for China Petrochemical and Universal Cement
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Universal is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding China Petrochemical Developmen and Universal Cement Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Cement Corp 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 Universal Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Cement Corp has no effect on the direction of China Petrochemical i.e., China Petrochemical and Universal Cement go up and down completely randomly.
Pair Corralation between China Petrochemical and Universal Cement
Assuming the 90 days trading horizon China Petrochemical Development is expected to under-perform the Universal Cement. In addition to that, China Petrochemical is 1.08 times more volatile than Universal Cement Corp. It trades about -0.08 of its total potential returns per unit of risk. Universal Cement Corp is currently generating about -0.05 per unit of volatility. If you would invest 3,010 in Universal Cement Corp on September 13, 2024 and sell it today you would lose (80.00) from holding Universal Cement Corp or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Petrochemical Developmen vs. Universal Cement Corp
Performance |
| Timeline |
| China Petrochemical |
| Universal Cement Corp |
China Petrochemical and Universal Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petrochemical and Universal Cement
The main advantage of trading using opposite China Petrochemical and Universal Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petrochemical position performs unexpectedly, Universal Cement 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 Universal Cement will offset losses from the drop in Universal Cement'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 |
| Universal Cement vs. Chia Hsin Cement | Universal Cement vs. Hsing Ta Cement | Universal Cement vs. USI Corp | Universal Cement vs. Asia Polymer Corp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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