Correlation Between KINGBOARD CHEMICAL and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL and Sinopec Shanghai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL with a short position of Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Sinopec Shanghai.
Diversification Opportunities for KINGBOARD CHEMICAL and Sinopec Shanghai
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KINGBOARD and Sinopec is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Sinopec Shanghai
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 1.22 times less return on investment than Sinopec Shanghai. But when comparing it to its historical volatility, KINGBOARD CHEMICAL is 1.51 times less risky than Sinopec Shanghai. It trades about 0.03 of its potential returns per unit of risk. Sinopec Shanghai Petrochemical is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Sinopec Shanghai Petrochemical on September 1, 2024 and sell it today you would lose (1.00) from holding Sinopec Shanghai Petrochemical or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Sinopec Shanghai Pet |
KINGBOARD CHEMICAL and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Sinopec Shanghai
The main advantage of trading using opposite KINGBOARD CHEMICAL and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL 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.| KINGBOARD CHEMICAL vs. TSOGO SUN GAMING | KINGBOARD CHEMICAL vs. NEWELL RUBBERMAID | KINGBOARD CHEMICAL vs. Boyd Gaming | KINGBOARD CHEMICAL vs. Martin Marietta Materials |
| Sinopec Shanghai vs. Darden Restaurants | Sinopec Shanghai vs. SBI Insurance Group | Sinopec Shanghai vs. SWISS WATER DECAFFCOFFEE | Sinopec Shanghai vs. Lion One Metals |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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