Correlation Between Sichuan Hebang and Westlake Chemical

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

Diversification Opportunities for Sichuan Hebang and Westlake Chemical

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Sichuan and Westlake is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Hebang Biotechnology and Westlake Chemical Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical and Sichuan Hebang 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 Sichuan Hebang Biotechnology are associated (or correlated) with Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical has no effect on the direction of Sichuan Hebang i.e., Sichuan Hebang and Westlake Chemical go up and down completely randomly.

Pair Corralation between Sichuan Hebang and Westlake Chemical

Assuming the 90 days trading horizon Sichuan Hebang Biotechnology is expected to generate 1.75 times more return on investment than Westlake Chemical. However, Sichuan Hebang is 1.75 times more volatile than Westlake Chemical Partners. It trades about 0.01 of its potential returns per unit of risk. Westlake Chemical Partners is currently generating about -0.06 per unit of risk. If you would invest  229.00  in Sichuan Hebang Biotechnology on October 7, 2025 and sell it today you would lose (2.00) from holding Sichuan Hebang Biotechnology or give up 0.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.41%
ValuesDaily Returns

Sichuan Hebang Biotechnology  vs.  Westlake Chemical Partners

 Performance 
       Timeline  
Sichuan Hebang Biote 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Sichuan Hebang Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sichuan Hebang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Westlake Chemical 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Westlake Chemical Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Westlake Chemical is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Sichuan Hebang and Westlake Chemical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sichuan Hebang and Westlake Chemical

The main advantage of trading using opposite Sichuan Hebang and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Hebang position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.
The idea behind Sichuan Hebang Biotechnology and Westlake Chemical Partners 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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