Correlation Between Inner Mongolia and Rongsheng Petrochemical
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By analyzing existing cross correlation between Inner Mongolia BaoTou and Rongsheng Petrochemical Co, you can compare the effects of market volatilities on Inner Mongolia and Rongsheng 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 Inner Mongolia with a short position of Rongsheng Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inner Mongolia and Rongsheng Petrochemical.
Diversification Opportunities for Inner Mongolia and Rongsheng Petrochemical
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Inner and Rongsheng is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Inner Mongolia BaoTou and Rongsheng Petrochemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rongsheng Petrochemical and Inner Mongolia 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 Inner Mongolia BaoTou are associated (or correlated) with Rongsheng Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rongsheng Petrochemical has no effect on the direction of Inner Mongolia i.e., Inner Mongolia and Rongsheng Petrochemical go up and down completely randomly.
Pair Corralation between Inner Mongolia and Rongsheng Petrochemical
Assuming the 90 days trading horizon Inner Mongolia BaoTou is expected to generate 2.67 times more return on investment than Rongsheng Petrochemical. However, Inner Mongolia is 2.67 times more volatile than Rongsheng Petrochemical Co. It trades about 0.15 of its potential returns per unit of risk. Rongsheng Petrochemical Co is currently generating about -0.03 per unit of risk. If you would invest 175.00 in Inner Mongolia BaoTou on August 29, 2024 and sell it today you would earn a total of 21.00 from holding Inner Mongolia BaoTou or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inner Mongolia BaoTou vs. Rongsheng Petrochemical Co
Performance |
| Timeline |
| Inner Mongolia BaoTou |
| Rongsheng Petrochemical |
Inner Mongolia and Rongsheng Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inner Mongolia and Rongsheng Petrochemical
The main advantage of trading using opposite Inner Mongolia and Rongsheng Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inner Mongolia position performs unexpectedly, Rongsheng 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 Rongsheng Petrochemical will offset losses from the drop in Rongsheng Petrochemical's long position.| Inner Mongolia vs. Xiangyang Automobile Bearing | Inner Mongolia vs. Heren Health Co | Inner Mongolia vs. Sinomach Automobile Co | Inner Mongolia vs. Anhui Jianghuai Automobile |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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