Correlation Between Dongfeng Automobile and China Petroleum
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By analyzing existing cross correlation between Dongfeng Automobile Co and China Petroleum Chemical, you can compare the effects of market volatilities on Dongfeng Automobile and China Petroleum 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 Dongfeng Automobile with a short position of China Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongfeng Automobile and China Petroleum.
Diversification Opportunities for Dongfeng Automobile and China Petroleum
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dongfeng and China is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dongfeng Automobile Co and China Petroleum Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petroleum Chemical and Dongfeng Automobile 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 Dongfeng Automobile Co are associated (or correlated) with China Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petroleum Chemical has no effect on the direction of Dongfeng Automobile i.e., Dongfeng Automobile and China Petroleum go up and down completely randomly.
Pair Corralation between Dongfeng Automobile and China Petroleum
Assuming the 90 days trading horizon Dongfeng Automobile Co is expected to under-perform the China Petroleum. In addition to that, Dongfeng Automobile is 2.79 times more volatile than China Petroleum Chemical. It trades about -0.16 of its total potential returns per unit of risk. China Petroleum Chemical is currently generating about -0.01 per unit of volatility. If you would invest 644.00 in China Petroleum Chemical on October 12, 2024 and sell it today you would lose (3.00) from holding China Petroleum Chemical or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongfeng Automobile Co vs. China Petroleum Chemical
Performance |
| Timeline |
| Dongfeng Automobile |
| China Petroleum Chemical |
Dongfeng Automobile and China Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongfeng Automobile and China Petroleum
The main advantage of trading using opposite Dongfeng Automobile and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongfeng Automobile position performs unexpectedly, China Petroleum 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 Petroleum will offset losses from the drop in China Petroleum's long position.The idea behind Dongfeng Automobile Co and China Petroleum Chemical 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.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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