Correlation Between China Petroleum and Linzhou Heavy
Specify exactly 2 symbols:
By analyzing existing cross correlation between China Petroleum Chemical and Linzhou Heavy Machinery, you can compare the effects of market volatilities on China Petroleum and Linzhou Heavy 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 China Petroleum with a short position of Linzhou Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petroleum and Linzhou Heavy.
Diversification Opportunities for China Petroleum and Linzhou Heavy
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Linzhou is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding China Petroleum Chemical and Linzhou Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linzhou Heavy Machinery and China Petroleum 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 China Petroleum Chemical are associated (or correlated) with Linzhou Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linzhou Heavy Machinery has no effect on the direction of China Petroleum i.e., China Petroleum and Linzhou Heavy go up and down completely randomly.
Pair Corralation between China Petroleum and Linzhou Heavy
Assuming the 90 days trading horizon China Petroleum Chemical is expected to under-perform the Linzhou Heavy. But the stock apears to be less risky and, when comparing its historical volatility, China Petroleum Chemical is 2.46 times less risky than Linzhou Heavy. The stock trades about -0.07 of its potential returns per unit of risk. The Linzhou Heavy Machinery is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Linzhou Heavy Machinery on November 7, 2024 and sell it today you would lose (17.00) from holding Linzhou Heavy Machinery or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Petroleum Chemical vs. Linzhou Heavy Machinery
Performance |
| Timeline |
| China Petroleum Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Linzhou Heavy Machinery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China Petroleum and Linzhou Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petroleum and Linzhou Heavy
The main advantage of trading using opposite China Petroleum and Linzhou Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petroleum position performs unexpectedly, Linzhou Heavy 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 Linzhou Heavy will offset losses from the drop in Linzhou Heavy's long position.The idea behind China Petroleum Chemical and Linzhou Heavy Machinery 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |