Correlation Between PetroChina and Sichuan Qiaoyuan
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By analyzing existing cross correlation between PetroChina Co Ltd and Sichuan Qiaoyuan Gas, you can compare the effects of market volatilities on PetroChina and Sichuan Qiaoyuan 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 Sichuan Qiaoyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina and Sichuan Qiaoyuan.
Diversification Opportunities for PetroChina and Sichuan Qiaoyuan
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PetroChina and Sichuan is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Sichuan Qiaoyuan Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Qiaoyuan Gas 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 Sichuan Qiaoyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Qiaoyuan Gas has no effect on the direction of PetroChina i.e., PetroChina and Sichuan Qiaoyuan go up and down completely randomly.
Pair Corralation between PetroChina and Sichuan Qiaoyuan
Assuming the 90 days trading horizon PetroChina Co Ltd is expected to under-perform the Sichuan Qiaoyuan. But the stock apears to be less risky and, when comparing its historical volatility, PetroChina Co Ltd is 1.41 times less risky than Sichuan Qiaoyuan. The stock trades about -0.25 of its potential returns per unit of risk. The Sichuan Qiaoyuan Gas is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 3,436 in Sichuan Qiaoyuan Gas on November 7, 2024 and sell it today you would lose (209.00) from holding Sichuan Qiaoyuan Gas or give up 6.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroChina Co Ltd vs. Sichuan Qiaoyuan Gas
Performance |
| Timeline |
| PetroChina |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sichuan Qiaoyuan Gas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PetroChina and Sichuan Qiaoyuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroChina and Sichuan Qiaoyuan
The main advantage of trading using opposite PetroChina and Sichuan Qiaoyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, Sichuan Qiaoyuan 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 Sichuan Qiaoyuan will offset losses from the drop in Sichuan Qiaoyuan's long position.The idea behind PetroChina Co Ltd and Sichuan Qiaoyuan Gas 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.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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