Correlation Between Fujian Oriental and PetroChina

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

Diversification Opportunities for Fujian Oriental and PetroChina

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Fujian and PetroChina is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Oriental Silver and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Fujian Oriental 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 Fujian Oriental Silver 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 Fujian Oriental i.e., Fujian Oriental and PetroChina go up and down completely randomly.

Pair Corralation between Fujian Oriental and PetroChina

Assuming the 90 days trading horizon Fujian Oriental Silver is expected to under-perform the PetroChina. In addition to that, Fujian Oriental is 2.52 times more volatile than PetroChina Co Ltd. It trades about -0.13 of its total potential returns per unit of risk. PetroChina Co Ltd is currently generating about 0.28 per unit of volatility. If you would invest  803.00  in PetroChina Co Ltd on September 25, 2024 and sell it today you would earn a total of  75.00  from holding PetroChina Co Ltd or generate 9.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Fujian Oriental Silver  vs.  PetroChina Co Ltd

 Performance 
       Timeline  
Fujian Oriental Silver 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Oriental Silver are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Oriental sustained solid returns over the last few months and may actually be approaching a breakup point.
PetroChina 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Co Ltd are ranked lower than 3 (%) 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.

Fujian Oriental and PetroChina Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fujian Oriental and PetroChina

The main advantage of trading using opposite Fujian Oriental and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Oriental 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 Fujian Oriental Silver 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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