Correlation Between Transport International and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and Sinopec Shanghai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and Sinopec Shanghai.
Diversification Opportunities for Transport International and Sinopec Shanghai
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transport and Sinopec is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin 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 Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between Transport International and Sinopec Shanghai
Assuming the 90 days horizon Transport International Holdings is expected to generate 1.13 times more return on investment than Sinopec Shanghai. However, Transport International is 1.13 times more volatile than Sinopec Shanghai Petrochemical. It trades about 0.07 of its potential returns per unit of risk. Sinopec Shanghai Petrochemical is currently generating about 0.06 per unit of risk. If you would invest 55.00 in Transport International Holdings on September 3, 2024 and sell it today you would earn a total of 41.00 from holding Transport International Holdings or generate 74.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| Transport International |
| Sinopec Shanghai Pet |
Transport International and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and Sinopec Shanghai
The main advantage of trading using opposite Transport International and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. Superior Plus Corp | Transport International vs. NMI Holdings | Transport International vs. Origin Agritech | Transport International vs. SIVERS SEMICONDUCTORS AB |
| Sinopec Shanghai vs. Marathon Petroleum Corp | Sinopec Shanghai vs. Neste Oyj | Sinopec Shanghai vs. ENEOS Holdings | Sinopec Shanghai vs. PTT OILRETBUS FOR BA10 |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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