Correlation Between Phillips and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both Phillips 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 Phillips and Sinopec Shanghai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phillips 66 and Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on Phillips 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 Phillips with a short position of Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and Sinopec Shanghai.
Diversification Opportunities for Phillips and Sinopec Shanghai
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Phillips and Sinopec is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 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 Phillips 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 Phillips 66 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 Phillips i.e., Phillips and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between Phillips and Sinopec Shanghai
Considering the 90-day investment horizon Phillips is expected to generate 5.36 times less return on investment than Sinopec Shanghai. But when comparing it to its historical volatility, Phillips 66 is 6.85 times less risky than Sinopec Shanghai. It trades about 0.05 of its potential returns per unit of risk. 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 September 2, 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phillips 66 vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| Phillips 66 |
| Sinopec Shanghai Pet |
Phillips and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phillips and Sinopec Shanghai
The main advantage of trading using opposite Phillips and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips 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.| Phillips vs. Marathon Petroleum Corp | Phillips vs. HF Sinclair Corp | Phillips vs. PBF Energy | Phillips vs. Sunoco LP |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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