Correlation Between Sinopec Shanghai and China Petroleum
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and China Petroleum 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 Sinopec Shanghai and China Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinopec Shanghai Petrochemical and China Petroleum Chemical, you can compare the effects of market volatilities on Sinopec Shanghai and China Petroleum 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 Sinopec Shanghai with a short position of China Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and China Petroleum.
Diversification Opportunities for Sinopec Shanghai and China Petroleum
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sinopec and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and China Petroleum Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petroleum Chemical and Sinopec Shanghai 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 Sinopec Shanghai Petrochemical are associated (or correlated) with China Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petroleum Chemical has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and China Petroleum go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and China Petroleum
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to generate 3.34 times more return on investment than China Petroleum. However, Sinopec Shanghai is 3.34 times more volatile than China Petroleum Chemical. It trades about 0.08 of its potential returns per unit of risk. China Petroleum Chemical is currently generating about 0.05 per unit of risk. If you would invest 13.00 in Sinopec Shanghai Petrochemical on September 13, 2024 and sell it today you would earn a total of 1.00 from holding Sinopec Shanghai Petrochemical or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. China Petroleum Chemical
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| China Petroleum Chemical |
Sinopec Shanghai and China Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and China Petroleum
The main advantage of trading using opposite Sinopec Shanghai and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, China Petroleum 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 Petroleum will offset losses from the drop in China Petroleum's long position.| Sinopec Shanghai vs. Superior Plus Corp | Sinopec Shanghai vs. SIVERS SEMICONDUCTORS AB | Sinopec Shanghai vs. Norsk Hydro ASA | Sinopec Shanghai vs. Reliance Steel Aluminum |
| China Petroleum vs. HYATT HOTELS A | China Petroleum vs. Charoen Pokphand Foods | China Petroleum vs. InterContinental Hotels Group | China Petroleum vs. National Beverage 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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