Correlation Between China Petrochemical and Chun Yuan
Can any of the company-specific risk be diversified away by investing in both China Petrochemical and Chun Yuan 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 Chun Yuan 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 Chun Yuan Steel, you can compare the effects of market volatilities on China Petrochemical and Chun Yuan 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 Chun Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petrochemical and Chun Yuan.
Diversification Opportunities for China Petrochemical and Chun Yuan
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Chun is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding China Petrochemical Developmen and Chun Yuan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chun Yuan Steel 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 Chun Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chun Yuan Steel has no effect on the direction of China Petrochemical i.e., China Petrochemical and Chun Yuan go up and down completely randomly.
Pair Corralation between China Petrochemical and Chun Yuan
Assuming the 90 days trading horizon China Petrochemical Development is expected to generate 1.18 times more return on investment than Chun Yuan. However, China Petrochemical is 1.18 times more volatile than Chun Yuan Steel. It trades about 0.07 of its potential returns per unit of risk. Chun Yuan Steel is currently generating about 0.0 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 Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Petrochemical Developmen vs. Chun Yuan Steel
Performance |
| Timeline |
| China Petrochemical |
| Chun Yuan Steel |
China Petrochemical and Chun Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petrochemical and Chun Yuan
The main advantage of trading using opposite China Petrochemical and Chun Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petrochemical position performs unexpectedly, Chun Yuan 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 Chun Yuan will offset losses from the drop in Chun Yuan's long position.| China Petrochemical vs. China Man Made Fiber | China Petrochemical vs. USI Corp | China Petrochemical vs. Yulon Motor Co |
| Chun Yuan vs. China Man Made Fiber | Chun Yuan vs. USI Corp | Chun Yuan vs. China Petrochemical Development | Chun Yuan 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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