Correlation Between China Petrochemical and Ton Yi
Can any of the company-specific risk be diversified away by investing in both China Petrochemical and Ton Yi 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 Ton Yi 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 Ton Yi Industrial, you can compare the effects of market volatilities on China Petrochemical and Ton Yi 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 Ton Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petrochemical and Ton Yi.
Diversification Opportunities for China Petrochemical and Ton Yi
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Ton is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding China Petrochemical Developmen and Ton Yi Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ton Yi 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 Ton Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ton Yi Industrial has no effect on the direction of China Petrochemical i.e., China Petrochemical and Ton Yi go up and down completely randomly.
Pair Corralation between China Petrochemical and Ton Yi
Assuming the 90 days trading horizon China Petrochemical Development is expected to generate 0.95 times more return on investment than Ton Yi. However, China Petrochemical Development is 1.06 times less risky than Ton Yi. It trades about -0.08 of its potential returns per unit of risk. Ton Yi Industrial is currently generating about -0.14 per unit of risk. If you would invest 837.00 in China Petrochemical Development on September 13, 2024 and sell it today you would lose (39.00) from holding China Petrochemical Development or give up 4.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Petrochemical Developmen vs. Ton Yi Industrial
Performance |
| Timeline |
| China Petrochemical |
| Ton Yi Industrial |
China Petrochemical and Ton Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petrochemical and Ton Yi
The main advantage of trading using opposite China Petrochemical and Ton Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petrochemical position performs unexpectedly, Ton Yi 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 Ton Yi will offset losses from the drop in Ton Yi'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 |
| Ton Yi vs. Tainan Spinning Co | Ton Yi vs. Lealea Enterprise Co | Ton Yi vs. China Petrochemical Development | Ton Yi 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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