Correlation Between TRAVEL + and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both TRAVEL + 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 TRAVEL + and Sinopec Shanghai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on TRAVEL + 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 TRAVEL + with a short position of Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and Sinopec Shanghai.
Diversification Opportunities for TRAVEL + and Sinopec Shanghai
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TRAVEL and Sinopec is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 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 TRAVEL + 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 TRAVEL LEISURE DL 01 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 TRAVEL + i.e., TRAVEL + and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between TRAVEL + and Sinopec Shanghai
Assuming the 90 days trading horizon TRAVEL + is expected to generate 1.83 times less return on investment than Sinopec Shanghai. But when comparing it to its historical volatility, TRAVEL LEISURE DL 01 is 2.59 times less risky than Sinopec Shanghai. It trades about 0.07 of its potential returns per unit of risk. Sinopec Shanghai Petrochemical is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Sinopec Shanghai Petrochemical on October 19, 2024 and sell it today you would earn a total of 2.00 from holding Sinopec Shanghai Petrochemical or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAVEL LEISURE DL 01 vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| TRAVEL LEISURE DL |
| Sinopec Shanghai Pet |
TRAVEL + and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAVEL + and Sinopec Shanghai
The main advantage of trading using opposite TRAVEL + and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + 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.| TRAVEL + vs. YOOMA WELLNESS INC | TRAVEL + vs. EPSILON HEALTHCARE LTD | TRAVEL + vs. WESANA HEALTH HOLD | TRAVEL + vs. Rayonier Advanced Materials |
| Sinopec Shanghai vs. GEELY AUTOMOBILE | Sinopec Shanghai vs. Vishay Intertechnology | Sinopec Shanghai vs. Siamgas And Petrochemicals | Sinopec Shanghai vs. CARSALESCOM |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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