Correlation Between Sinopec Shanghai and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and Yokohama Rubber 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 Yokohama Rubber 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 The Yokohama Rubber, you can compare the effects of market volatilities on Sinopec Shanghai and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and Yokohama Rubber.
Diversification Opportunities for Sinopec Shanghai and Yokohama Rubber
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sinopec and Yokohama is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and Yokohama Rubber go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and Yokohama Rubber
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to generate 2.82 times more return on investment than Yokohama Rubber. However, Sinopec Shanghai is 2.82 times more volatile than The Yokohama Rubber. It trades about 0.02 of its potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.04 per unit of risk. If you would invest 16.00 in Sinopec Shanghai Petrochemical on October 16, 2024 and sell it today you would lose (2.00) from holding Sinopec Shanghai Petrochemical or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. The Yokohama Rubber
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| Yokohama Rubber |
Sinopec Shanghai and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and Yokohama Rubber
The main advantage of trading using opposite Sinopec Shanghai and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| Sinopec Shanghai vs. Playa Hotels Resorts | Sinopec Shanghai vs. JD SPORTS FASH | Sinopec Shanghai vs. Corporate Travel Management | Sinopec Shanghai vs. Q2M Managementberatung AG |
| Yokohama Rubber vs. T MOBILE US | Yokohama Rubber vs. Easy Software AG | Yokohama Rubber vs. AAC TECHNOLOGHLDGADR | Yokohama Rubber vs. SOFI TECHNOLOGIES |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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