Correlation Between China Petroleum and Maccura Biotechnology

Can any of the company-specific risk be diversified away by investing in both China Petroleum and Maccura Biotechnology 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 Maccura Biotechnology 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 Maccura Biotechnology Co, you can compare the effects of market volatilities on China Petroleum and Maccura Biotechnology 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 Maccura Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petroleum and Maccura Biotechnology.

Diversification Opportunities for China Petroleum and Maccura Biotechnology

-0.26

Correlation Coefficient

China Petroleum  Maccura Biotechnology

Very good diversification

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

Pair Corralation between China Petroleum and Maccura Biotechnology

Assuming the 90 days trading horizon China Petroleum Chemical is expected to under-perform the Maccura Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, China Petroleum Chemical is 1.65 times less risky than Maccura Biotechnology. The stock trades about -0.07 of its potential returns per unit of risk. The Maccura Biotechnology Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,186  in Maccura Biotechnology Co on September 2, 2024 and sell it today you would earn a total of  234.00  from holding Maccura Biotechnology Co or generate 19.73% 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.  Maccura Biotechnology Co

China Petroleum Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Petroleum Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Maccura Biotechnology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maccura Biotechnology Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maccura Biotechnology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Petroleum and Maccura Biotechnology

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

The idea behind China Petroleum Chemical and Maccura Biotechnology Co 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.