Correlation Between AIR PRODCHEMICALS and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and Sinopec Shanghai 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 AIR PRODCHEMICALS and Sinopec Shanghai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on AIR PRODCHEMICALS and Sinopec Shanghai 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 AIR PRODCHEMICALS with a short position of Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Sinopec Shanghai.
Diversification Opportunities for AIR PRODCHEMICALS and Sinopec Shanghai
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AIR and Sinopec is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Sinopec Shanghai Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Shanghai Pet and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS are associated (or correlated) with Sinopec Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Shanghai Pet has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Sinopec Shanghai
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.33 times more return on investment than Sinopec Shanghai. However, AIR PRODCHEMICALS is 3.07 times less risky than Sinopec Shanghai. It trades about 0.14 of its potential returns per unit of risk. Sinopec Shanghai Petrochemical is currently generating about 0.03 per unit of risk. If you would invest 23,621 in AIR PRODCHEMICALS on August 28, 2024 and sell it today you would earn a total of 7,989 from holding AIR PRODCHEMICALS or generate 33.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Sinopec Shanghai Pet |
AIR PRODCHEMICALS and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Sinopec Shanghai
The main advantage of trading using opposite AIR PRODCHEMICALS and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, Sinopec Shanghai 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 Sinopec Shanghai will offset losses from the drop in Sinopec Shanghai's long position.| AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Microsoft | AIR PRODCHEMICALS vs. Microsoft |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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