Correlation Between China Petroleum and Suofeiya Home

Can any of the company-specific risk be diversified away by investing in both China Petroleum and Suofeiya Home 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 China Petroleum and Suofeiya Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Petroleum Chemical and Suofeiya Home Collection, you can compare the effects of market volatilities on China Petroleum and Suofeiya Home 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 China Petroleum with a short position of Suofeiya Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petroleum and Suofeiya Home.

Diversification Opportunities for China Petroleum and Suofeiya Home

-0.26

Correlation Coefficient

China Petroleum  Suofeiya Home

Very good diversification

The 3 months correlation between China and Suofeiya is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding China Petroleum Chemical and Suofeiya Home Collection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suofeiya Home Collection and China Petroleum 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 China Petroleum Chemical are associated (or correlated) with Suofeiya Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suofeiya Home Collection has no effect on the direction of China Petroleum i.e., China Petroleum and Suofeiya Home go up and down completely randomly.

Pair Corralation between China Petroleum and Suofeiya Home

Assuming the 90 days trading horizon China Petroleum Chemical is expected to generate 0.66 times more return on investment than Suofeiya Home. However, China Petroleum Chemical is 1.52 times less risky than Suofeiya Home. It trades about 0.07 of its potential returns per unit of risk. Suofeiya Home Collection is currently generating about 0.01 per unit of risk. If you would invest  435.00  in China Petroleum Chemical on September 27, 2024 and sell it today you would earn a total of  241.00  from holding China Petroleum Chemical or generate 55.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Petroleum Chemical  vs.  Suofeiya Home Collection

China Petroleum Chemical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Petroleum Chemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, China Petroleum is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Suofeiya Home Collection

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Suofeiya Home Collection are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Suofeiya Home may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with China Petroleum and Suofeiya Home

The main advantage of trading using opposite China Petroleum and Suofeiya Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petroleum position performs unexpectedly, Suofeiya Home 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 Suofeiya Home will offset losses from the drop in Suofeiya Home's long position.

The idea behind China Petroleum Chemical and Suofeiya Home Collection pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.