Correlation Between China Petrochemical and Shiny Chemical
Can any of the company-specific risk be diversified away by investing in both China Petrochemical and Shiny Chemical 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 Shiny Chemical 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 Shiny Chemical Industrial, you can compare the effects of market volatilities on China Petrochemical and Shiny Chemical 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 Shiny Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petrochemical and Shiny Chemical.
Diversification Opportunities for China Petrochemical and Shiny Chemical
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Shiny is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding China Petrochemical Developmen and Shiny Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shiny Chemical Industrial 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 Shiny Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shiny Chemical Industrial has no effect on the direction of China Petrochemical i.e., China Petrochemical and Shiny Chemical go up and down completely randomly.
Pair Corralation between China Petrochemical and Shiny Chemical
Assuming the 90 days trading horizon China Petrochemical Development is expected to under-perform the Shiny Chemical. But the stock apears to be less risky and, when comparing its historical volatility, China Petrochemical Development is 1.36 times less risky than Shiny Chemical. The stock trades about -0.02 of its potential returns per unit of risk. The Shiny Chemical Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 11,650 in Shiny Chemical Industrial on August 29, 2024 and sell it today you would earn a total of 4,750 from holding Shiny Chemical Industrial or generate 40.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Petrochemical Developmen vs. Shiny Chemical Industrial
Performance |
| Timeline |
| China Petrochemical |
| Shiny Chemical Industrial |
China Petrochemical and Shiny Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petrochemical and Shiny Chemical
The main advantage of trading using opposite China Petrochemical and Shiny Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petrochemical position performs unexpectedly, Shiny Chemical 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 Shiny Chemical will offset losses from the drop in Shiny Chemical'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 |
| Shiny Chemical vs. China Steel Chemical | Shiny Chemical vs. TTET Union Corp | Shiny Chemical vs. Eternal Materials Co | Shiny Chemical vs. Yung Chi Paint |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |