Correlation Between China Petrochemical and Double Bond
Can any of the company-specific risk be diversified away by investing in both China Petrochemical and Double Bond 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 Double Bond 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 Double Bond Chemical, you can compare the effects of market volatilities on China Petrochemical and Double Bond 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 Double Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petrochemical and Double Bond.
Diversification Opportunities for China Petrochemical and Double Bond
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Double is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding China Petrochemical Developmen and Double Bond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Double Bond Chemical 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 Double Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Double Bond Chemical has no effect on the direction of China Petrochemical i.e., China Petrochemical and Double Bond go up and down completely randomly.
Pair Corralation between China Petrochemical and Double Bond
Assuming the 90 days trading horizon China Petrochemical Development is expected to under-perform the Double Bond. In addition to that, China Petrochemical is 2.11 times more volatile than Double Bond Chemical. It trades about -0.08 of its total potential returns per unit of risk. Double Bond Chemical is currently generating about 0.33 per unit of volatility. If you would invest 4,485 in Double Bond Chemical on October 28, 2024 and sell it today you would earn a total of 265.00 from holding Double Bond Chemical or generate 5.91% 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. Double Bond Chemical
Performance |
| Timeline |
| China Petrochemical |
| Double Bond Chemical |
China Petrochemical and Double Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petrochemical and Double Bond
The main advantage of trading using opposite China Petrochemical and Double Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petrochemical position performs unexpectedly, Double Bond 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 Double Bond will offset losses from the drop in Double Bond's long position.| China Petrochemical vs. Nan Ya Plastics | China Petrochemical vs. Formosa Chemicals Fibre | China Petrochemical vs. China Steel Corp | China Petrochemical vs. Formosa Petrochemical Corp |
| Double Bond vs. Nan Ya Plastics | Double Bond vs. China Petrochemical Development | Double Bond vs. Eternal Materials Co | Double Bond vs. TSRC Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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