Correlation Between Sinopec Shanghai and Par Pacific
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and Par Pacific 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 Par Pacific 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 Par Pacific Holdings, you can compare the effects of market volatilities on Sinopec Shanghai and Par Pacific 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 Par Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and Par Pacific.
Diversification Opportunities for Sinopec Shanghai and Par Pacific
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sinopec and Par is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and Par Pacific Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Par Pacific Holdings 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 Par Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Par Pacific Holdings has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and Par Pacific go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and Par Pacific
Assuming the 90 days horizon Sinopec Shanghai Petrochemical is expected to under-perform the Par Pacific. In addition to that, Sinopec Shanghai is 2.3 times more volatile than Par Pacific Holdings. It trades about -0.01 of its total potential returns per unit of risk. Par Pacific Holdings is currently generating about 0.18 per unit of volatility. If you would invest 1,568 in Par Pacific Holdings on August 31, 2024 and sell it today you would earn a total of 172.00 from holding Par Pacific Holdings or generate 10.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. Par Pacific Holdings
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| Par Pacific Holdings |
Sinopec Shanghai and Par Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and Par Pacific
The main advantage of trading using opposite Sinopec Shanghai and Par Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, Par Pacific 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 Par Pacific will offset losses from the drop in Par Pacific's long position.| Sinopec Shanghai vs. CVR Energy | Sinopec Shanghai vs. Valero Energy | Sinopec Shanghai vs. Phillips 66 | Sinopec Shanghai vs. Marathon Petroleum Corp |
| Par Pacific vs. Delek Logistics Partners | Par Pacific vs. CVR Energy | Par Pacific vs. PBF Energy | Par Pacific vs. HF Sinclair Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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