Correlation Between Zhejiang Huayou and Rongsheng Petrochemical
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By analyzing existing cross correlation between Zhejiang Huayou Cobalt and Rongsheng Petrochemical Co, you can compare the effects of market volatilities on Zhejiang Huayou 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 Zhejiang Huayou with a short position of Rongsheng Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Huayou and Rongsheng Petrochemical.
Diversification Opportunities for Zhejiang Huayou and Rongsheng Petrochemical
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Zhejiang and Rongsheng is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Huayou Cobalt and Rongsheng Petrochemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rongsheng Petrochemical and Zhejiang Huayou 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 Zhejiang Huayou Cobalt 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 Zhejiang Huayou i.e., Zhejiang Huayou and Rongsheng Petrochemical go up and down completely randomly.
Pair Corralation between Zhejiang Huayou and Rongsheng Petrochemical
Assuming the 90 days trading horizon Zhejiang Huayou Cobalt is expected to under-perform the Rongsheng Petrochemical. In addition to that, Zhejiang Huayou is 1.15 times more volatile than Rongsheng Petrochemical Co. It trades about -0.15 of its total potential returns per unit of risk. Rongsheng Petrochemical Co is currently generating about -0.13 per unit of volatility. If you would invest 954.00 in Rongsheng Petrochemical Co on October 30, 2024 and sell it today you would lose (71.00) from holding Rongsheng Petrochemical Co or give up 7.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhejiang Huayou Cobalt vs. Rongsheng Petrochemical Co
Performance |
| Timeline |
| Zhejiang Huayou Cobalt |
| Rongsheng Petrochemical |
Zhejiang Huayou and Rongsheng Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhejiang Huayou and Rongsheng Petrochemical
The main advantage of trading using opposite Zhejiang Huayou and Rongsheng Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Huayou 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.| Zhejiang Huayou vs. Zijin Mining Group | Zhejiang Huayou vs. Wanhua Chemical Group | Zhejiang Huayou vs. Baoshan Iron Steel | Zhejiang Huayou 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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