Correlation Between GEELY AUTOMOBILE and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both GEELY AUTOMOBILE 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 GEELY AUTOMOBILE and Sinopec Shanghai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEELY AUTOMOBILE and Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE with a short position of Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEELY AUTOMOBILE and Sinopec Shanghai.
Diversification Opportunities for GEELY AUTOMOBILE and Sinopec Shanghai
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GEELY and Sinopec is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 GEELY AUTOMOBILE 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 GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between GEELY AUTOMOBILE and Sinopec Shanghai
Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to under-perform the Sinopec Shanghai. But the stock apears to be less risky and, when comparing its historical volatility, GEELY AUTOMOBILE is 2.87 times less risky than Sinopec Shanghai. The stock trades about -0.36 of its potential returns per unit of risk. The Sinopec Shanghai Petrochemical is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Sinopec Shanghai Petrochemical on October 19, 2024 and sell it today you would lose (1.00) from holding Sinopec Shanghai Petrochemical or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
GEELY AUTOMOBILE vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| GEELY AUTOMOBILE |
| Sinopec Shanghai Pet |
GEELY AUTOMOBILE and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEELY AUTOMOBILE and Sinopec Shanghai
The main advantage of trading using opposite GEELY AUTOMOBILE and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEELY AUTOMOBILE 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.| GEELY AUTOMOBILE vs. USU Software AG | GEELY AUTOMOBILE vs. Monument Mining Limited | GEELY AUTOMOBILE vs. MCEWEN MINING INC | GEELY AUTOMOBILE vs. FORMPIPE SOFTWARE AB |
| Sinopec Shanghai vs. GEELY AUTOMOBILE | Sinopec Shanghai vs. Vishay Intertechnology | Sinopec Shanghai vs. Siamgas And Petrochemicals | Sinopec Shanghai vs. CARSALESCOM |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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