Correlation Between Sinopec Shanghai and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks PLC, you can compare the effects of market volatilities on Sinopec Shanghai and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and Fevertree Drinks.
Diversification Opportunities for Sinopec Shanghai and Fevertree Drinks
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sinopec and Fevertree is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and Fevertree Drinks
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to under-perform the Fevertree Drinks. In addition to that, Sinopec Shanghai is 2.19 times more volatile than Fevertree Drinks PLC. It trades about -0.07 of its total potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.11 per unit of volatility. If you would invest 830.00 in Fevertree Drinks PLC on October 30, 2024 and sell it today you would lose (70.00) from holding Fevertree Drinks PLC or give up 8.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. Fevertree Drinks PLC
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| Fevertree Drinks PLC |
Sinopec Shanghai and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and Fevertree Drinks
The main advantage of trading using opposite Sinopec Shanghai and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Sinopec Shanghai vs. AGF Management Limited | Sinopec Shanghai vs. Ringmetall SE | Sinopec Shanghai vs. Waste Management | Sinopec Shanghai vs. VARIOUS EATERIES LS |
| Fevertree Drinks vs. ADRIATIC METALS LS 013355 | Fevertree Drinks vs. ALTAIR RES INC | Fevertree Drinks vs. AEON METALS LTD | Fevertree Drinks vs. SIERRA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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