Correlation Between Tonghua Grape and China Petroleum
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By analyzing existing cross correlation between Tonghua Grape Wine and China Petroleum Chemical, you can compare the effects of market volatilities on Tonghua Grape 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 Tonghua Grape with a short position of China Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tonghua Grape and China Petroleum.
Diversification Opportunities for Tonghua Grape and China Petroleum
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tonghua and China is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tonghua Grape Wine 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 Tonghua Grape 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 Tonghua Grape Wine 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 Tonghua Grape i.e., Tonghua Grape and China Petroleum go up and down completely randomly.
Pair Corralation between Tonghua Grape and China Petroleum
Assuming the 90 days trading horizon Tonghua Grape Wine is expected to generate 2.45 times more return on investment than China Petroleum. However, Tonghua Grape is 2.45 times more volatile than China Petroleum Chemical. It trades about -0.12 of its potential returns per unit of risk. China Petroleum Chemical is currently generating about -0.47 per unit of risk. If you would invest 300.00 in Tonghua Grape Wine on November 30, 2024 and sell it today you would lose (30.00) from holding Tonghua Grape Wine or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tonghua Grape Wine vs. China Petroleum Chemical
Performance |
| Timeline |
| Tonghua Grape Wine |
| China Petroleum Chemical |
Tonghua Grape and China Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tonghua Grape and China Petroleum
The main advantage of trading using opposite Tonghua Grape and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tonghua Grape 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.| Tonghua Grape vs. Shenzhen Bioeasy Biotechnology | Tonghua Grape vs. Lutian Machinery Co | Tonghua Grape vs. Liaoning Chengda Biotechnology | Tonghua Grape vs. Wuhan Hvsen Biotechnology |
| China Petroleum vs. Shuhua Sports Co | China Petroleum vs. Sichuan Fulin Transportation | China Petroleum vs. Rising Nonferrous Metals | China Petroleum vs. Wintao Communications Co |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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