Correlation Between Hengli Petrochemical and Chongqing Sulian
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By analyzing existing cross correlation between Hengli Petrochemical Co and Chongqing Sulian Plastic, you can compare the effects of market volatilities on Hengli Petrochemical and Chongqing Sulian 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 Chongqing Sulian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengli Petrochemical and Chongqing Sulian.
Diversification Opportunities for Hengli Petrochemical and Chongqing Sulian
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hengli and Chongqing is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hengli Petrochemical Co and Chongqing Sulian Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Sulian Plastic 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 Chongqing Sulian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Sulian Plastic has no effect on the direction of Hengli Petrochemical i.e., Hengli Petrochemical and Chongqing Sulian go up and down completely randomly.
Pair Corralation between Hengli Petrochemical and Chongqing Sulian
Assuming the 90 days trading horizon Hengli Petrochemical is expected to generate 54.56 times less return on investment than Chongqing Sulian. But when comparing it to its historical volatility, Hengli Petrochemical Co is 7.19 times less risky than Chongqing Sulian. It trades about 0.02 of its potential returns per unit of risk. Chongqing Sulian Plastic is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,490 in Chongqing Sulian Plastic on November 3, 2024 and sell it today you would earn a total of 392.00 from holding Chongqing Sulian Plastic or generate 15.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hengli Petrochemical Co vs. Chongqing Sulian Plastic
Performance |
| Timeline |
| Hengli Petrochemical |
| Chongqing Sulian Plastic |
Hengli Petrochemical and Chongqing Sulian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengli Petrochemical and Chongqing Sulian
The main advantage of trading using opposite Hengli Petrochemical and Chongqing Sulian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengli Petrochemical position performs unexpectedly, Chongqing Sulian 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 Chongqing Sulian will offset losses from the drop in Chongqing Sulian's long position.The idea behind Hengli Petrochemical Co and Chongqing Sulian Plastic 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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