Correlation Between Sinopec Shanghai and Kellogg
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and Kellogg 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 Kellogg 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 Kellogg Company, you can compare the effects of market volatilities on Sinopec Shanghai and Kellogg 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 Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and Kellogg.
Diversification Opportunities for Sinopec Shanghai and Kellogg
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sinopec and Kellogg is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company 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 Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellogg Company has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and Kellogg go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and Kellogg
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to generate 8.52 times more return on investment than Kellogg. However, Sinopec Shanghai is 8.52 times more volatile than Kellogg Company. It trades about 0.05 of its potential returns per unit of risk. Kellogg Company is currently generating about 0.24 per unit of risk. If you would invest 13.00 in Sinopec Shanghai Petrochemical on October 14, 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. Kellogg Company
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| Kellogg Company |
Sinopec Shanghai and Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and Kellogg
The main advantage of trading using opposite Sinopec Shanghai and Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, Kellogg 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 Kellogg will offset losses from the drop in Kellogg's long position.| Sinopec Shanghai vs. TRADEDOUBLER AB SK | Sinopec Shanghai vs. FAST RETAIL ADR | Sinopec Shanghai vs. MARKET VECTR RETAIL | Sinopec Shanghai vs. Entravision Communications |
| Kellogg vs. ANTA SPORTS PRODUCT | Kellogg vs. Nippon Light Metal | Kellogg vs. VIENNA INSURANCE GR | Kellogg vs. Jacquet Metal Service |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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