Correlation Between China Petrochemical and Quintain Steel
Can any of the company-specific risk be diversified away by investing in both China Petrochemical and Quintain Steel 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 Quintain Steel 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 Quintain Steel Co, you can compare the effects of market volatilities on China Petrochemical and Quintain Steel 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 Quintain Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petrochemical and Quintain Steel.
Diversification Opportunities for China Petrochemical and Quintain Steel
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Quintain is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding China Petrochemical Developmen and Quintain Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quintain 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 Quintain Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quintain Steel has no effect on the direction of China Petrochemical i.e., China Petrochemical and Quintain Steel go up and down completely randomly.
Pair Corralation between China Petrochemical and Quintain Steel
Assuming the 90 days trading horizon China Petrochemical is expected to generate 1.06 times less return on investment than Quintain Steel. But when comparing it to its historical volatility, China Petrochemical Development is 1.98 times less risky than Quintain Steel. It trades about 0.45 of its potential returns per unit of risk. Quintain Steel Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,100 in Quintain Steel Co on November 27, 2024 and sell it today you would earn a total of 130.00 from holding Quintain Steel Co or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Petrochemical Developmen vs. Quintain Steel Co
Performance |
| Timeline |
| China Petrochemical |
| Quintain Steel |
China Petrochemical and Quintain Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petrochemical and Quintain Steel
The main advantage of trading using opposite China Petrochemical and Quintain Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petrochemical position performs unexpectedly, Quintain Steel 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 Quintain Steel will offset losses from the drop in Quintain Steel'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 |
| Quintain Steel vs. Tycoons Group Enterprise | Quintain Steel vs. Chung Hwa Pulp | Quintain Steel vs. China Man Made Fiber | Quintain Steel vs. Champion Building Materials |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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