Correlation Between Sinopec Shanghai and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL, you can compare the effects of market volatilities on Sinopec Shanghai and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and KINGBOARD CHEMICAL.
Diversification Opportunities for Sinopec Shanghai and KINGBOARD CHEMICAL
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sinopec and KINGBOARD is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD 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 KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and KINGBOARD CHEMICAL
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to generate 1.51 times more return on investment than KINGBOARD CHEMICAL. However, Sinopec Shanghai is 1.51 times more volatile than KINGBOARD CHEMICAL. It trades about 0.03 of its potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.03 per unit of risk. If you would invest 16.00 in Sinopec Shanghai Petrochemical on September 1, 2024 and sell it today you would lose (1.00) from holding Sinopec Shanghai Petrochemical or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. KINGBOARD CHEMICAL
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| KINGBOARD CHEMICAL |
Sinopec Shanghai and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and KINGBOARD CHEMICAL
The main advantage of trading using opposite Sinopec Shanghai and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL will offset losses from the drop in KINGBOARD CHEMICAL's long position.| Sinopec Shanghai vs. Darden Restaurants | Sinopec Shanghai vs. SBI Insurance Group | Sinopec Shanghai vs. SWISS WATER DECAFFCOFFEE | Sinopec Shanghai vs. Lion One Metals |
| KINGBOARD CHEMICAL vs. TSOGO SUN GAMING | KINGBOARD CHEMICAL vs. NEWELL RUBBERMAID | KINGBOARD CHEMICAL vs. Boyd Gaming | KINGBOARD CHEMICAL vs. Martin Marietta Materials |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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