Correlation Between Hubei Tech and PetroChina

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

Diversification Opportunities for Hubei Tech and PetroChina

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between Hubei and PetroChina is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Tech Semiconductors and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Hubei Tech 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 Hubei Tech Semiconductors are associated (or correlated) with PetroChina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroChina has no effect on the direction of Hubei Tech i.e., Hubei Tech and PetroChina go up and down completely randomly.

Pair Corralation between Hubei Tech and PetroChina

Assuming the 90 days trading horizon Hubei Tech Semiconductors is expected to under-perform the PetroChina. In addition to that, Hubei Tech is 2.59 times more volatile than PetroChina Co Ltd. It trades about -0.15 of its total potential returns per unit of risk. PetroChina Co Ltd is currently generating about 0.02 per unit of volatility. If you would invest  826.00  in PetroChina Co Ltd on November 6, 2024 and sell it today you would earn a total of  7.00  from holding PetroChina Co Ltd or generate 0.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Hubei Tech Semiconductors  vs.  PetroChina Co Ltd

 Performance 
       Timeline  
Hubei Tech Semiconductors 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hubei Tech Semiconductors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
PetroChina 

Risk-Adjusted Performance

1 of 100

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

Hubei Tech and PetroChina Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hubei Tech and PetroChina

The main advantage of trading using opposite Hubei Tech and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubei Tech position performs unexpectedly, PetroChina 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 PetroChina will offset losses from the drop in PetroChina's long position.
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The idea behind Hubei Tech Semiconductors and PetroChina Co Ltd 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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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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