Correlation Between PetroChina and Weichai Heavy
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By analyzing existing cross correlation between PetroChina Co Ltd and Weichai Heavy Machinery, you can compare the effects of market volatilities on PetroChina and Weichai Heavy 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 PetroChina with a short position of Weichai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina and Weichai Heavy.
Diversification Opportunities for PetroChina and Weichai Heavy
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PetroChina and Weichai is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Weichai Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weichai Heavy Machinery and PetroChina 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 PetroChina Co Ltd are associated (or correlated) with Weichai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weichai Heavy Machinery has no effect on the direction of PetroChina i.e., PetroChina and Weichai Heavy go up and down completely randomly.
Pair Corralation between PetroChina and Weichai Heavy
Assuming the 90 days trading horizon PetroChina Co Ltd is expected to under-perform the Weichai Heavy. But the stock apears to be less risky and, when comparing its historical volatility, PetroChina Co Ltd is 5.38 times less risky than Weichai Heavy. The stock trades about -0.03 of its potential returns per unit of risk. The Weichai Heavy Machinery is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,066 in Weichai Heavy Machinery on September 1, 2024 and sell it today you would earn a total of 142.00 from holding Weichai Heavy Machinery or generate 13.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroChina Co Ltd vs. Weichai Heavy Machinery
Performance |
| Timeline |
| PetroChina |
| Weichai Heavy Machinery |
PetroChina and Weichai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroChina and Weichai Heavy
The main advantage of trading using opposite PetroChina and Weichai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, Weichai Heavy 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 Weichai Heavy will offset losses from the drop in Weichai Heavy's long position.| PetroChina vs. Dongjiang Environmental Co | PetroChina vs. Tonghua Grape Wine | PetroChina vs. Dezhan HealthCare Co | PetroChina vs. Guangdong Liantai Environmental |
| Weichai Heavy vs. Cultural Investment Holdings | Weichai Heavy vs. Gome Telecom Equipment | Weichai Heavy vs. Bus Online Co | Weichai Heavy vs. Holitech Technology Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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