Correlation Between Sinopec Shanghai and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and Thyssenkrupp 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 Thyssenkrupp 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 thyssenkrupp AG, you can compare the effects of market volatilities on Sinopec Shanghai and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and Thyssenkrupp.
Diversification Opportunities for Sinopec Shanghai and Thyssenkrupp
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sinopec and Thyssenkrupp is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and Thyssenkrupp
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to under-perform the Thyssenkrupp. In addition to that, Sinopec Shanghai is 1.39 times more volatile than thyssenkrupp AG. It trades about -0.08 of its total potential returns per unit of risk. thyssenkrupp AG is currently generating about 0.25 per unit of volatility. If you would invest 392.00 in thyssenkrupp AG on October 27, 2024 and sell it today you would earn a total of 54.00 from holding thyssenkrupp AG or generate 13.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. thyssenkrupp AG
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| thyssenkrupp AG |
Sinopec Shanghai and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and Thyssenkrupp
The main advantage of trading using opposite Sinopec Shanghai and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| Sinopec Shanghai vs. Reliance Industries Limited | Sinopec Shanghai vs. Marathon Petroleum Corp | Sinopec Shanghai vs. Valero Energy | Sinopec Shanghai vs. Phillips 66 |
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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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