Correlation Between Sichuan Troy and Hengli Petrochemical
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By analyzing existing cross correlation between Sichuan Troy Information and Hengli Petrochemical Co, you can compare the effects of market volatilities on Sichuan Troy and Hengli 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 Sichuan Troy with a short position of Hengli Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Troy and Hengli Petrochemical.
Diversification Opportunities for Sichuan Troy and Hengli Petrochemical
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sichuan and Hengli is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Troy Information and Hengli Petrochemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengli Petrochemical and Sichuan Troy 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 Sichuan Troy Information are associated (or correlated) with Hengli Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengli Petrochemical has no effect on the direction of Sichuan Troy i.e., Sichuan Troy and Hengli Petrochemical go up and down completely randomly.
Pair Corralation between Sichuan Troy and Hengli Petrochemical
Assuming the 90 days trading horizon Sichuan Troy Information is expected to generate 2.52 times more return on investment than Hengli Petrochemical. However, Sichuan Troy is 2.52 times more volatile than Hengli Petrochemical Co. It trades about 0.01 of its potential returns per unit of risk. Hengli Petrochemical Co is currently generating about -0.01 per unit of risk. If you would invest 1,185 in Sichuan Troy Information on November 7, 2024 and sell it today you would lose (289.00) from holding Sichuan Troy Information or give up 24.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sichuan Troy Information vs. Hengli Petrochemical Co
Performance |
| Timeline |
| Sichuan Troy Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hengli Petrochemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Sichuan Troy and Hengli Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Troy and Hengli Petrochemical
The main advantage of trading using opposite Sichuan Troy and Hengli Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Troy position performs unexpectedly, Hengli 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 Hengli Petrochemical will offset losses from the drop in Hengli Petrochemical's long position.The idea behind Sichuan Troy Information and Hengli Petrochemical Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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