Correlation Between PetroChina and Poly Real

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

Diversification Opportunities for PetroChina and Poly Real

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between PetroChina and Poly is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Poly Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poly Real Estate 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 Poly Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poly Real Estate has no effect on the direction of PetroChina i.e., PetroChina and Poly Real go up and down completely randomly.

Pair Corralation between PetroChina and Poly Real

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to generate 1.6 times more return on investment than Poly Real. However, PetroChina is 1.6 times more volatile than Poly Real Estate. It trades about 0.12 of its potential returns per unit of risk. Poly Real Estate is currently generating about -0.61 per unit of risk. If you would invest  845.00  in PetroChina Co Ltd on October 15, 2024 and sell it today you would earn a total of  30.00  from holding PetroChina Co Ltd or generate 3.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PetroChina Co Ltd  vs.  Poly Real Estate

 Performance 
       Timeline  
PetroChina 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
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.
Poly Real Estate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Poly Real Estate 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

PetroChina and Poly Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PetroChina and Poly Real

The main advantage of trading using opposite PetroChina and Poly Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, Poly Real 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 Poly Real will offset losses from the drop in Poly Real's long position.
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The idea behind PetroChina Co Ltd and Poly Real Estate 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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