Correlation Between Sinopec Shanghai and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and Sanyo 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 Sanyo 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 Sanyo Chemical Industries, you can compare the effects of market volatilities on Sinopec Shanghai and Sanyo 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and Sanyo Chemical.
Diversification Opportunities for Sinopec Shanghai and Sanyo Chemical
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sinopec and Sanyo is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and Sanyo Chemical go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and Sanyo Chemical
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to generate 6.11 times more return on investment than Sanyo Chemical. However, Sinopec Shanghai is 6.11 times more volatile than Sanyo Chemical Industries. It trades about -0.01 of its potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.18 per unit of risk. If you would invest 14.00 in Sinopec Shanghai Petrochemical on August 29, 2024 and sell it today you would lose (1.00) from holding Sinopec Shanghai Petrochemical or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. Sanyo Chemical Industries
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| Sanyo Chemical Industries |
Sinopec Shanghai and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and Sanyo Chemical
The main advantage of trading using opposite Sinopec Shanghai and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, Sanyo 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 Sanyo Chemical will offset losses from the drop in Sanyo 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 |
| Sanyo Chemical vs. Linde plc | Sanyo Chemical vs. Superior Plus Corp | Sanyo Chemical vs. NMI Holdings | Sanyo 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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