Correlation Between HF SINCLAIR and China Coal
Can any of the company-specific risk be diversified away by investing in both HF SINCLAIR and China Coal 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 HF SINCLAIR and China Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HF SINCLAIR P and China Coal Energy, you can compare the effects of market volatilities on HF SINCLAIR and China Coal 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 HF SINCLAIR with a short position of China Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF SINCLAIR and China Coal.
Diversification Opportunities for HF SINCLAIR and China Coal
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HL80 and China is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding HF SINCLAIR P and China Coal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Coal Energy and HF SINCLAIR 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 HF SINCLAIR P are associated (or correlated) with China Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Coal Energy has no effect on the direction of HF SINCLAIR i.e., HF SINCLAIR and China Coal go up and down completely randomly.
Pair Corralation between HF SINCLAIR and China Coal
Assuming the 90 days trading horizon HF SINCLAIR P is expected to under-perform the China Coal. But the stock apears to be less risky and, when comparing its historical volatility, HF SINCLAIR P is 1.5 times less risky than China Coal. The stock trades about 0.0 of its potential returns per unit of risk. The China Coal Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 54.00 in China Coal Energy on September 5, 2024 and sell it today you would earn a total of 57.00 from holding China Coal Energy or generate 105.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
HF SINCLAIR P vs. China Coal Energy
Performance |
| Timeline |
| HF SINCLAIR P |
| China Coal Energy |
HF SINCLAIR and China Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HF SINCLAIR and China Coal
The main advantage of trading using opposite HF SINCLAIR and China Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF SINCLAIR position performs unexpectedly, China Coal 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 China Coal will offset losses from the drop in China Coal's long position.The idea behind HF SINCLAIR P and China Coal Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| China Coal vs. NORWEGIAN AIR SHUT | China Coal vs. HF SINCLAIR P | China Coal vs. Altair Engineering | China Coal vs. Elmos Semiconductor SE |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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