Correlation Between Air Transport and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Transport 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 Transport Services and Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on Air Transport 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 Transport with a short position of Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Sinopec Shanghai.
Diversification Opportunities for Air Transport and Sinopec Shanghai
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Air and Sinopec is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services 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 Transport 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 Transport Services 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 Transport i.e., Air Transport and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between Air Transport and Sinopec Shanghai
Assuming the 90 days horizon Air Transport Services is expected to generate 0.18 times more return on investment than Sinopec Shanghai. However, Air Transport Services is 5.43 times less risky than Sinopec Shanghai. It trades about -0.05 of its potential returns per unit of risk. Sinopec Shanghai Petrochemical is currently generating about -0.11 per unit of risk. If you would invest 2,060 in Air Transport Services on January 13, 2025 and sell it today you would lose (20.00) from holding Air Transport Services or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Air Transport Services vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| Air Transport Services |
| Sinopec Shanghai Pet |
Air Transport and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Sinopec Shanghai
The main advantage of trading using opposite Air Transport and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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 Transport vs. ARDAGH METAL PACDL 0001 | Air Transport vs. NH Foods | Air Transport vs. AEON METALS LTD | Air Transport vs. MOLSON RS BEVERAGE |
| Sinopec Shanghai vs. Reliance Industries Limited | Sinopec Shanghai vs. Marathon Petroleum Corp | Sinopec Shanghai vs. Valero Energy | Sinopec Shanghai vs. Phillips 66 |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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