Correlation Between Sinopec Shanghai and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and Quaker 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 Quaker 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 Quaker Chemical, you can compare the effects of market volatilities on Sinopec Shanghai and Quaker 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and Quaker Chemical.
Diversification Opportunities for Sinopec Shanghai and Quaker Chemical
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sinopec and Quaker is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and Quaker Chemical go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and Quaker Chemical
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to under-perform the Quaker Chemical. In addition to that, Sinopec Shanghai is 1.86 times more volatile than Quaker Chemical. It trades about -0.01 of its total potential returns per unit of risk. Quaker Chemical is currently generating about 0.04 per unit of volatility. If you would invest 15,250 in Quaker Chemical on August 29, 2024 and sell it today you would earn a total of 450.00 from holding Quaker Chemical or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. Quaker Chemical
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| Quaker Chemical |
Sinopec Shanghai and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and Quaker Chemical
The main advantage of trading using opposite Sinopec Shanghai and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, Quaker 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Sinopec Shanghai vs. Neste Oyj | Sinopec Shanghai vs. Superior Plus Corp | Sinopec Shanghai vs. NMI Holdings | Sinopec Shanghai vs. Origin Agritech |
| Quaker Chemical vs. Linde plc | Quaker Chemical vs. Superior Plus Corp | Quaker Chemical vs. NMI Holdings | Quaker Chemical vs. SIVERS SEMICONDUCTORS AB |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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