Correlation Between CHEMICAL INDUSTRIES and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both CHEMICAL INDUSTRIES and Sinopec Shanghai 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 CHEMICAL INDUSTRIES and Sinopec Shanghai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHEMICAL INDUSTRIES and Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on CHEMICAL INDUSTRIES and Sinopec Shanghai 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 CHEMICAL INDUSTRIES with a short position of Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEMICAL INDUSTRIES and Sinopec Shanghai.
Diversification Opportunities for CHEMICAL INDUSTRIES and Sinopec Shanghai
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHEMICAL and Sinopec is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHEMICAL INDUSTRIES and Sinopec Shanghai Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Shanghai Pet and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES are associated (or correlated) with Sinopec Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Shanghai Pet has no effect on the direction of CHEMICAL INDUSTRIES i.e., CHEMICAL INDUSTRIES and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between CHEMICAL INDUSTRIES and Sinopec Shanghai
Assuming the 90 days trading horizon CHEMICAL INDUSTRIES is expected to generate 9.0 times less return on investment than Sinopec Shanghai. But when comparing it to its historical volatility, CHEMICAL INDUSTRIES is 22.07 times less risky than Sinopec Shanghai. It trades about 0.06 of its potential returns per unit of risk. Sinopec Shanghai Petrochemical is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Sinopec Shanghai Petrochemical on September 1, 2024 and sell it today you would lose (1.00) from holding Sinopec Shanghai Petrochemical or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHEMICAL INDUSTRIES vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| CHEMICAL INDUSTRIES |
| Sinopec Shanghai Pet |
CHEMICAL INDUSTRIES and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHEMICAL INDUSTRIES and Sinopec Shanghai
The main advantage of trading using opposite CHEMICAL INDUSTRIES and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEMICAL INDUSTRIES position performs unexpectedly, Sinopec Shanghai 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 Sinopec Shanghai will offset losses from the drop in Sinopec Shanghai's long position.| CHEMICAL INDUSTRIES vs. Retail Estates NV | CHEMICAL INDUSTRIES vs. MOLSON RS BEVERAGE | CHEMICAL INDUSTRIES vs. Monster Beverage Corp | CHEMICAL INDUSTRIES vs. Ross Stores |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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