Correlation Between Sinopec Shanghai and Compass Group
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and Compass Group 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 Compass Group 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 Compass Group PLC, you can compare the effects of market volatilities on Sinopec Shanghai and Compass Group 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 Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and Compass Group.
Diversification Opportunities for Sinopec Shanghai and Compass Group
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sinopec and Compass is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Group PLC 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 Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and Compass Group go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and Compass Group
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to generate 3.56 times more return on investment than Compass Group. However, Sinopec Shanghai is 3.56 times more volatile than Compass Group PLC. It trades about 0.06 of its potential returns per unit of risk. Compass Group PLC is currently generating about 0.09 per unit of risk. If you would invest 11.00 in Sinopec Shanghai Petrochemical on October 25, 2024 and sell it today you would earn a total of 3.00 from holding Sinopec Shanghai Petrochemical or generate 27.27% 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. Compass Group PLC
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| Compass Group PLC |
Sinopec Shanghai and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and Compass Group
The main advantage of trading using opposite Sinopec Shanghai and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, Compass Group 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 Compass Group will offset losses from the drop in Compass Group's long position.| Sinopec Shanghai vs. Suntory Beverage Food | Sinopec Shanghai vs. Diamyd Medical AB | Sinopec Shanghai vs. National Beverage Corp | Sinopec Shanghai vs. Carnegie Clean Energy |
| Compass Group vs. CSSC Offshore Marine | Compass Group vs. FORWARD AIR P | Compass Group vs. Eidesvik Offshore ASA | Compass Group vs. Transport International Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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