Correlation Between Sinopec Shanghai and Sekisui Chemical
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and Sekisui 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 Sekisui 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 Sekisui Chemical Co, you can compare the effects of market volatilities on Sinopec Shanghai and Sekisui 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 Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and Sekisui Chemical.
Diversification Opportunities for Sinopec Shanghai and Sekisui Chemical
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sinopec and Sekisui is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui 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 Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and Sekisui Chemical go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and Sekisui Chemical
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to generate 2.94 times more return on investment than Sekisui Chemical. However, Sinopec Shanghai is 2.94 times more volatile than Sekisui Chemical Co. It trades about 0.06 of its potential returns per unit of risk. Sekisui Chemical Co is currently generating about 0.04 per unit of risk. If you would invest 11.00 in Sinopec Shanghai Petrochemical on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Sinopec Shanghai Petrochemical or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. Sekisui Chemical Co
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| Sekisui Chemical |
Sinopec Shanghai and Sekisui Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and Sekisui Chemical
The main advantage of trading using opposite Sinopec Shanghai and Sekisui Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, Sekisui 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 Sekisui Chemical will offset losses from the drop in Sekisui Chemical's long position.| Sinopec Shanghai vs. Marathon Petroleum Corp | Sinopec Shanghai vs. Neste Oyj | Sinopec Shanghai vs. ENEOS Holdings | Sinopec Shanghai vs. PTT OILRETBUS FOR BA10 |
| Sekisui Chemical vs. Strategic Investments AS | Sekisui Chemical vs. Japan Asia Investment | Sekisui Chemical vs. Virtus Investment Partners | Sekisui Chemical vs. United Internet AG |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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