Correlation Between Changjiang Jinggong and Rongsheng Petrochemical
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By analyzing existing cross correlation between Changjiang Jinggong Steel and Rongsheng Petrochemical Co, you can compare the effects of market volatilities on Changjiang Jinggong 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 Changjiang Jinggong with a short position of Rongsheng Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changjiang Jinggong and Rongsheng Petrochemical.
Diversification Opportunities for Changjiang Jinggong and Rongsheng Petrochemical
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Changjiang and Rongsheng is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Changjiang Jinggong Steel and Rongsheng Petrochemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rongsheng Petrochemical and Changjiang Jinggong 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 Changjiang Jinggong Steel 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 Changjiang Jinggong i.e., Changjiang Jinggong and Rongsheng Petrochemical go up and down completely randomly.
Pair Corralation between Changjiang Jinggong and Rongsheng Petrochemical
Assuming the 90 days trading horizon Changjiang Jinggong Steel is expected to generate 0.8 times more return on investment than Rongsheng Petrochemical. However, Changjiang Jinggong Steel is 1.25 times less risky than Rongsheng Petrochemical. It trades about -0.14 of its potential returns per unit of risk. Rongsheng Petrochemical Co is currently generating about -0.12 per unit of risk. If you would invest 305.00 in Changjiang Jinggong Steel on October 29, 2024 and sell it today you would lose (11.00) from holding Changjiang Jinggong Steel or give up 3.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changjiang Jinggong Steel vs. Rongsheng Petrochemical Co
Performance |
| Timeline |
| Changjiang Jinggong Steel |
| Rongsheng Petrochemical |
Changjiang Jinggong and Rongsheng Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changjiang Jinggong and Rongsheng Petrochemical
The main advantage of trading using opposite Changjiang Jinggong and Rongsheng Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changjiang Jinggong 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.| Changjiang Jinggong vs. Anhui Transport Consulting | Changjiang Jinggong vs. Sichuan Fulin Transportation | Changjiang Jinggong vs. Shuhua Sports Co | Changjiang Jinggong vs. Southern PublishingMedia 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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