Correlation Between China Railway and China Petroleum
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By analyzing existing cross correlation between China Railway Group and China Petroleum Chemical, you can compare the effects of market volatilities on China Railway 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 China Railway with a short position of China Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and China Petroleum.
Diversification Opportunities for China Railway and China Petroleum
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and China is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group 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 China Railway 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 Railway Group 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 China Railway i.e., China Railway and China Petroleum go up and down completely randomly.
Pair Corralation between China Railway and China Petroleum
Assuming the 90 days trading horizon China Railway Group is expected to generate 1.96 times more return on investment than China Petroleum. However, China Railway is 1.96 times more volatile than China Petroleum Chemical. It trades about -0.05 of its potential returns per unit of risk. China Petroleum Chemical is currently generating about -0.11 per unit of risk. If you would invest 655.00 in China Railway Group on August 27, 2024 and sell it today you would lose (18.00) from holding China Railway Group or give up 2.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Group vs. China Petroleum Chemical
Performance |
| Timeline |
| China Railway Group |
| China Petroleum Chemical |
China Railway and China Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and China Petroleum
The main advantage of trading using opposite China Railway and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway 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.| China Railway vs. Hoshine Silicon Ind | China Railway vs. Glodon Software Co | China Railway vs. Tianjin Ruixin Technology | China Railway vs. Linewell Software Co |
| China Petroleum vs. Winner Medical Co | China Petroleum vs. Jiujiang Shanshui Technology | China Petroleum vs. Northking Information Technology | China Petroleum vs. Tianshui Huatian Technology |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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