Correlation Between Walgreens Boots and Sinopec Kantons
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Sinopec Kantons 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 Walgreens Boots and Sinopec Kantons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walgreens Boots Alliance and Sinopec Kantons Holdings, you can compare the effects of market volatilities on Walgreens Boots and Sinopec Kantons 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 Walgreens Boots with a short position of Sinopec Kantons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Sinopec Kantons.
Diversification Opportunities for Walgreens Boots and Sinopec Kantons
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Walgreens and Sinopec is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Sinopec Kantons Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Kantons Holdings and Walgreens Boots 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 Walgreens Boots Alliance are associated (or correlated) with Sinopec Kantons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Kantons Holdings has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Sinopec Kantons go up and down completely randomly.
Pair Corralation between Walgreens Boots and Sinopec Kantons
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Sinopec Kantons. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 1.34 times less risky than Sinopec Kantons. The stock trades about -0.05 of its potential returns per unit of risk. The Sinopec Kantons Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Sinopec Kantons Holdings on September 14, 2024 and sell it today you would earn a total of 36.00 from holding Sinopec Kantons Holdings or generate 200.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.18% |
| Values | Daily Returns |
Walgreens Boots Alliance vs. Sinopec Kantons Holdings
Performance |
| Timeline |
| Walgreens Boots Alliance |
| Sinopec Kantons Holdings |
Walgreens Boots and Sinopec Kantons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walgreens Boots and Sinopec Kantons
The main advantage of trading using opposite Walgreens Boots and Sinopec Kantons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, Sinopec Kantons 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 Kantons will offset losses from the drop in Sinopec Kantons' long position.| Walgreens Boots vs. PetMed Express | Walgreens Boots vs. 111 Inc | Walgreens Boots vs. China Jo Jo Drugstores | Walgreens Boots vs. High Tide |
| Sinopec Kantons vs. DIVERSIFIED ROYALTY | Sinopec Kantons vs. Corporate Office Properties | Sinopec Kantons vs. Chuangs China Investments | Sinopec Kantons vs. CDL INVESTMENT |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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