Correlation Between Coremax Corp and China Petrochemical
Can any of the company-specific risk be diversified away by investing in both Coremax 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 Coremax 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 Coremax Corp and China Petrochemical Development, you can compare the effects of market volatilities on Coremax 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 Coremax Corp with a short position of China Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coremax Corp and China Petrochemical.
Diversification Opportunities for Coremax Corp and China Petrochemical
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coremax and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Coremax 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 Coremax 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 Coremax 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 Coremax Corp i.e., Coremax Corp and China Petrochemical go up and down completely randomly.
Pair Corralation between Coremax Corp and China Petrochemical
Assuming the 90 days trading horizon Coremax Corp is expected to generate 0.7 times more return on investment than China Petrochemical. However, Coremax Corp is 1.43 times less risky than China Petrochemical. It trades about -0.03 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 5,500 in Coremax Corp on October 28, 2024 and sell it today you would lose (50.00) from holding Coremax Corp or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coremax Corp vs. China Petrochemical Developmen
Performance |
| Timeline |
| Coremax Corp |
| China Petrochemical |
Coremax Corp and China Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coremax Corp and China Petrochemical
The main advantage of trading using opposite Coremax Corp and China Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coremax 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.| Coremax Corp vs. Mechema Chemicals Int | Coremax Corp vs. China Steel Chemical | Coremax Corp vs. Delta Electronics | Coremax Corp vs. Hota Industrial Mfg |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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