Correlation Between Hengli Petrochemical and Shandong Longquan
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By analyzing existing cross correlation between Hengli Petrochemical Co and Shandong Longquan Pipeline, you can compare the effects of market volatilities on Hengli Petrochemical and Shandong Longquan 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 Hengli Petrochemical with a short position of Shandong Longquan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengli Petrochemical and Shandong Longquan.
Diversification Opportunities for Hengli Petrochemical and Shandong Longquan
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hengli and Shandong is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hengli Petrochemical Co and Shandong Longquan Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Longquan and Hengli Petrochemical 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 Hengli Petrochemical Co are associated (or correlated) with Shandong Longquan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Longquan has no effect on the direction of Hengli Petrochemical i.e., Hengli Petrochemical and Shandong Longquan go up and down completely randomly.
Pair Corralation between Hengli Petrochemical and Shandong Longquan
Assuming the 90 days trading horizon Hengli Petrochemical is expected to generate 2.59 times less return on investment than Shandong Longquan. But when comparing it to its historical volatility, Hengli Petrochemical Co is 1.63 times less risky than Shandong Longquan. It trades about 0.03 of its potential returns per unit of risk. Shandong Longquan Pipeline is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 460.00 in Shandong Longquan Pipeline on October 26, 2024 and sell it today you would earn a total of 27.00 from holding Shandong Longquan Pipeline or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hengli Petrochemical Co vs. Shandong Longquan Pipeline
Performance |
| Timeline |
| Hengli Petrochemical |
| Shandong Longquan |
Hengli Petrochemical and Shandong Longquan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengli Petrochemical and Shandong Longquan
The main advantage of trading using opposite Hengli Petrochemical and Shandong Longquan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengli Petrochemical position performs unexpectedly, Shandong Longquan 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 Shandong Longquan will offset losses from the drop in Shandong Longquan's long position.| Hengli Petrochemical vs. Zijin Mining Group | Hengli Petrochemical vs. Wanhua Chemical Group | Hengli Petrochemical vs. Baoshan Iron Steel | Hengli Petrochemical vs. Shandong Gold Mining |
| Shandong Longquan vs. Zijin Mining Group | Shandong Longquan vs. Wanhua Chemical Group | Shandong Longquan vs. Baoshan Iron Steel | Shandong Longquan vs. Shandong Gold Mining |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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