Correlation Between Celxpert Energy and San Fu

Can any of the company-specific risk be diversified away by investing in both Celxpert Energy and San Fu 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 Celxpert Energy and San Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Celxpert Energy and San Fu Chemical, you can compare the effects of market volatilities on Celxpert Energy and San Fu 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 Celxpert Energy with a short position of San Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celxpert Energy and San Fu.

Diversification Opportunities for Celxpert Energy and San Fu

0.14

Correlation Coefficient

Celxpert Energy  San Fu

Average diversification

The 3 months correlation between Celxpert and San is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Celxpert Energy and San Fu Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fu Chemical and Celxpert Energy 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 Celxpert Energy are associated (or correlated) with San Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fu Chemical has no effect on the direction of Celxpert Energy i.e., Celxpert Energy and San Fu go up and down completely randomly.

Pair Corralation between Celxpert Energy and San Fu

Assuming the 90 days trading horizon Celxpert Energy is expected to generate 1.69 times more return on investment than San Fu. However, Celxpert Energy is 1.69 times more volatile than San Fu Chemical. It trades about 0.14 of its potential returns per unit of risk. San Fu Chemical is currently generating about 0.03 per unit of risk. If you would invest  2,445  in Celxpert Energy on September 14, 2024 and sell it today you would earn a total of  990.00  from holding Celxpert Energy or generate 40.49% return on investment over 90 days.

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

Celxpert Energy  vs.  San Fu Chemical

Celxpert Energy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Celxpert Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Celxpert Energy showed solid returns over the last few months and may actually be approaching a breakup point.

San Fu Chemical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in San Fu Chemical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, San Fu is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Celxpert Energy and San Fu

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

The idea behind Celxpert Energy and San Fu Chemical 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.