Correlation Between CVR Energy and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both CVR Energy 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 CVR Energy and Sinopec Shanghai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on CVR Energy 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 CVR Energy with a short position of Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Sinopec Shanghai.
Diversification Opportunities for CVR Energy and Sinopec Shanghai
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVR and Sinopec is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy 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 CVR Energy 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 CVR Energy 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 CVR Energy i.e., CVR Energy and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between CVR Energy and Sinopec Shanghai
Considering the 90-day investment horizon CVR Energy is expected to under-perform the Sinopec Shanghai. But the stock apears to be less risky and, when comparing its historical volatility, CVR Energy is 4.34 times less risky than Sinopec Shanghai. The stock trades about -0.01 of its potential returns per unit of risk. The Sinopec Shanghai Petrochemical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Sinopec Shanghai Petrochemical on August 31, 2024 and sell it today you would lose (9.00) from holding Sinopec Shanghai Petrochemical or give up 39.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
CVR Energy vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| CVR Energy |
| Sinopec Shanghai Pet |
CVR Energy and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Energy and Sinopec Shanghai
The main advantage of trading using opposite CVR Energy and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy 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.| CVR Energy vs. Delek Logistics Partners | CVR Energy vs. PBF Energy | CVR Energy vs. Par Pacific Holdings | CVR Energy vs. Delek Energy |
| Sinopec Shanghai vs. CVR Energy | Sinopec Shanghai vs. Valero Energy | Sinopec Shanghai vs. Phillips 66 | Sinopec Shanghai vs. Marathon Petroleum Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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