Correlation Between TSRC Corp and China Petrochemical
Can any of the company-specific risk be diversified away by investing in both TSRC Corp and China Petrochemical 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 TSRC Corp and China Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TSRC Corp and China Petrochemical Development, you can compare the effects of market volatilities on TSRC Corp and China Petrochemical 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 TSRC Corp with a short position of China Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of TSRC Corp and China Petrochemical.
Diversification Opportunities for TSRC Corp and China Petrochemical
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TSRC and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding TSRC Corp and China Petrochemical Developmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petrochemical and TSRC Corp 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 TSRC Corp are associated (or correlated) with China Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petrochemical has no effect on the direction of TSRC Corp i.e., TSRC Corp and China Petrochemical go up and down completely randomly.
Pair Corralation between TSRC Corp and China Petrochemical
Assuming the 90 days trading horizon TSRC Corp is expected to generate 0.65 times more return on investment than China Petrochemical. However, TSRC Corp is 1.53 times less risky than China Petrochemical. It trades about 0.0 of its potential returns per unit of risk. China Petrochemical Development is currently generating about -0.08 per unit of risk. If you would invest 2,045 in TSRC Corp on October 28, 2024 and sell it today you would lose (5.00) from holding TSRC Corp or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TSRC Corp vs. China Petrochemical Developmen
Performance |
| Timeline |
| TSRC Corp |
| China Petrochemical |
TSRC Corp and China Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TSRC Corp and China Petrochemical
The main advantage of trading using opposite TSRC Corp and China Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TSRC Corp position performs unexpectedly, China Petrochemical 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 China Petrochemical will offset losses from the drop in China Petrochemical's long position.| TSRC Corp vs. Mercuries Data Systems | TSRC Corp vs. Elite Material Co | TSRC Corp vs. Gloria Material Technology | TSRC Corp vs. Goldsun Building Materials |
| China Petrochemical vs. Nan Ya Plastics | China Petrochemical vs. Formosa Chemicals Fibre | China Petrochemical vs. China Steel Corp | China Petrochemical vs. Formosa Petrochemical 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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