Correlation Between China Petrochemical and UPC Technology
Can any of the company-specific risk be diversified away by investing in both China Petrochemical and UPC Technology 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 UPC Technology 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 UPC Technology Corp, you can compare the effects of market volatilities on China Petrochemical and UPC Technology 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 UPC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petrochemical and UPC Technology.
Diversification Opportunities for China Petrochemical and UPC Technology
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and UPC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Petrochemical Developmen and UPC Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPC Technology 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 UPC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPC Technology Corp has no effect on the direction of China Petrochemical i.e., China Petrochemical and UPC Technology go up and down completely randomly.
Pair Corralation between China Petrochemical and UPC Technology
Assuming the 90 days trading horizon China Petrochemical Development is expected to generate 0.84 times more return on investment than UPC Technology. However, China Petrochemical Development is 1.2 times less risky than UPC Technology. It trades about 0.07 of its potential returns per unit of risk. UPC Technology Corp is currently generating about -0.09 per unit of risk. If you would invest 818.00 in China Petrochemical Development on August 29, 2024 and sell it today you would earn a total of 15.00 from holding China Petrochemical Development or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Petrochemical Developmen vs. UPC Technology Corp
Performance |
| Timeline |
| China Petrochemical |
| UPC Technology Corp |
China Petrochemical and UPC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petrochemical and UPC Technology
The main advantage of trading using opposite China Petrochemical and UPC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petrochemical position performs unexpectedly, UPC Technology 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 UPC Technology will offset losses from the drop in UPC Technology's long position.| China Petrochemical vs. USI Corp | China Petrochemical vs. Grand Pacific Petrochemical | China Petrochemical vs. Taiwan Styrene Monomer | China Petrochemical vs. China Steel Corp |
| UPC Technology vs. Cheng Shin Rubber | UPC Technology vs. China Steel Chemical | UPC Technology vs. Yulon Motor 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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