Correlation Between PetroChina and China Merchants
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By analyzing existing cross correlation between PetroChina Co Ltd and China Merchants Shekou, you can compare the effects of market volatilities on PetroChina and China Merchants 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 China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina and China Merchants.
Diversification Opportunities for PetroChina and China Merchants
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PetroChina and China is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and China Merchants Shekou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Shekou 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 China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Shekou has no effect on the direction of PetroChina i.e., PetroChina and China Merchants go up and down completely randomly.
Pair Corralation between PetroChina and China Merchants
Assuming the 90 days trading horizon PetroChina Co Ltd is expected to under-perform the China Merchants. But the stock apears to be less risky and, when comparing its historical volatility, PetroChina Co Ltd is 1.41 times less risky than China Merchants. The stock trades about -0.05 of its potential returns per unit of risk. The China Merchants Shekou is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 915.00 in China Merchants Shekou on September 27, 2024 and sell it today you would earn a total of 108.00 from holding China Merchants Shekou or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroChina Co Ltd vs. China Merchants Shekou
Performance |
| Timeline |
| PetroChina |
| China Merchants Shekou |
PetroChina and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroChina and China Merchants
The main advantage of trading using opposite PetroChina and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, China Merchants 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 Merchants will offset losses from the drop in China Merchants' long position.| PetroChina vs. Zhejiang Kingland Pipeline | PetroChina vs. Huizhou Speed Wireless | PetroChina vs. Shaanxi Construction Machinery | PetroChina vs. Linktel Technologies Co |
| China Merchants vs. PetroChina Co Ltd | China Merchants vs. China Mobile Limited | China Merchants vs. CNOOC Limited | China Merchants vs. Ping An Insurance |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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