Correlation Between China Petrochemical and Ruentex Development
Can any of the company-specific risk be diversified away by investing in both China Petrochemical and Ruentex Development 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 Ruentex Development 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 Ruentex Development Co, you can compare the effects of market volatilities on China Petrochemical and Ruentex Development 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 Ruentex Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petrochemical and Ruentex Development.
Diversification Opportunities for China Petrochemical and Ruentex Development
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Ruentex is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding China Petrochemical Developmen and Ruentex Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ruentex Development 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 Ruentex Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ruentex Development has no effect on the direction of China Petrochemical i.e., China Petrochemical and Ruentex Development go up and down completely randomly.
Pair Corralation between China Petrochemical and Ruentex Development
Assuming the 90 days trading horizon China Petrochemical Development is expected to generate 1.22 times more return on investment than Ruentex Development. However, China Petrochemical is 1.22 times more volatile than Ruentex Development Co. It trades about -0.02 of its potential returns per unit of risk. Ruentex Development Co is currently generating about -0.22 per unit of risk. If you would invest 809.00 in China Petrochemical Development on September 12, 2024 and sell it today you would lose (6.00) from holding China Petrochemical Development or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Petrochemical Developmen vs. Ruentex Development Co
Performance |
| Timeline |
| China Petrochemical |
| Ruentex Development |
China Petrochemical and Ruentex Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petrochemical and Ruentex Development
The main advantage of trading using opposite China Petrochemical and Ruentex Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petrochemical position performs unexpectedly, Ruentex Development 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 Ruentex Development will offset losses from the drop in Ruentex Development'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 |
| Ruentex Development vs. Chong Hong Construction | Ruentex Development vs. Symtek Automation Asia | Ruentex Development vs. WiseChip Semiconductor | Ruentex Development vs. Novatek Microelectronics 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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