Correlation Between Cornerstone Building and China Petroleum

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Can any of the company-specific risk be diversified away by investing in both Cornerstone Building and China Petroleum 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 Cornerstone Building and China Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornerstone Building Brands and China Petroleum Chemical, you can compare the effects of market volatilities on Cornerstone Building and China Petroleum 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 Cornerstone Building with a short position of China Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Building and China Petroleum.

Diversification Opportunities for Cornerstone Building and China Petroleum

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Cornerstone and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Building Brands and China Petroleum Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petroleum Chemical and Cornerstone Building 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 Cornerstone Building Brands are associated (or correlated) with China Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petroleum Chemical has no effect on the direction of Cornerstone Building i.e., Cornerstone Building and China Petroleum go up and down completely randomly.

Pair Corralation between Cornerstone Building and China Petroleum

If you would invest (100.00) in China Petroleum Chemical on December 29, 2023 and sell it today you would earn a total of  100.00  from holding China Petroleum Chemical or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Cornerstone Building Brands  vs.  China Petroleum Chemical

 Performance 
       Timeline  
Cornerstone Building 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Cornerstone Building Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cornerstone Building is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.
China Petroleum Chemical 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days China Petroleum Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, China Petroleum is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Cornerstone Building and China Petroleum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cornerstone Building and China Petroleum

The main advantage of trading using opposite Cornerstone Building and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Building position performs unexpectedly, China Petroleum 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 China Petroleum will offset losses from the drop in China Petroleum's long position.
The idea behind Cornerstone Building Brands and China Petroleum 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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