Correlation Between China Petrochemical and K Laser
Can any of the company-specific risk be diversified away by investing in both China Petrochemical and K Laser 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 K Laser 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 K Laser Technology, you can compare the effects of market volatilities on China Petrochemical and K Laser 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 K Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petrochemical and K Laser.
Diversification Opportunities for China Petrochemical and K Laser
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and 2461 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding China Petrochemical Developmen and K Laser Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Laser Technology 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 K Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Laser Technology has no effect on the direction of China Petrochemical i.e., China Petrochemical and K Laser go up and down completely randomly.
Pair Corralation between China Petrochemical and K Laser
Assuming the 90 days trading horizon China Petrochemical Development is expected to generate 0.96 times more return on investment than K Laser. However, China Petrochemical Development is 1.04 times less risky than K Laser. It trades about -0.02 of its potential returns per unit of risk. K Laser Technology is currently generating about -0.02 per unit of risk. If you would invest 936.00 in China Petrochemical Development on September 12, 2024 and sell it today you would lose (133.00) from holding China Petrochemical Development or give up 14.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Petrochemical Developmen vs. K Laser Technology
Performance |
| Timeline |
| China Petrochemical |
| K Laser Technology |
China Petrochemical and K Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petrochemical and K Laser
The main advantage of trading using opposite China Petrochemical and K Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petrochemical position performs unexpectedly, K Laser 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 K Laser will offset losses from the drop in K Laser'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 |
| K Laser vs. Tainan Spinning Co | K Laser vs. Lealea Enterprise Co | K Laser vs. China Petrochemical Development | K Laser vs. Ruentex Development 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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