Correlation Between National Petroleum and Shin Hai
Can any of the company-specific risk be diversified away by investing in both National Petroleum and Shin Hai at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining National Petroleum and Shin Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Petroleum Co and Shin Hai Gas, you can compare the effects of market volatilities on National Petroleum and Shin Hai 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 National Petroleum with a short position of Shin Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Petroleum and Shin Hai.
Diversification Opportunities for National Petroleum and Shin Hai
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Shin is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding National Petroleum Co and Shin Hai Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Hai Gas and National Petroleum 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 National Petroleum Co are associated (or correlated) with Shin Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Hai Gas has no effect on the direction of National Petroleum i.e., National Petroleum and Shin Hai go up and down completely randomly.
Pair Corralation between National Petroleum and Shin Hai
Assuming the 90 days trading horizon National Petroleum Co is expected to generate 1.75 times more return on investment than Shin Hai. However, National Petroleum is 1.75 times more volatile than Shin Hai Gas. It trades about 0.04 of its potential returns per unit of risk. Shin Hai Gas is currently generating about 0.01 per unit of risk. If you would invest 5,020 in National Petroleum Co on September 12, 2024 and sell it today you would earn a total of 1,380 from holding National Petroleum Co or generate 27.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
National Petroleum Co vs. Shin Hai Gas
Performance |
| Timeline |
| National Petroleum |
| Shin Hai Gas |
National Petroleum and Shin Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Petroleum and Shin Hai
The main advantage of trading using opposite National Petroleum and Shin Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Petroleum position performs unexpectedly, Shin Hai 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 Shin Hai will offset losses from the drop in Shin Hai's long position.| National Petroleum vs. Taiwan Shin Kong | National Petroleum vs. Taiwan Secom Co | National Petroleum vs. Great Taipei Gas | National Petroleum vs. CTCI Corp |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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