Correlation Between PetroChina and Grinm Advanced

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Can any of the company-specific risk be diversified away by investing in both PetroChina and Grinm Advanced 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 Grinm Advanced 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 Grinm Advanced Materials, you can compare the effects of market volatilities on PetroChina and Grinm Advanced 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 Grinm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina and Grinm Advanced.

Diversification Opportunities for PetroChina and Grinm Advanced

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between PetroChina and Grinm is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Grinm Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grinm Advanced Materials 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 Grinm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grinm Advanced Materials has no effect on the direction of PetroChina i.e., PetroChina and Grinm Advanced go up and down completely randomly.

Pair Corralation between PetroChina and Grinm Advanced

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to under-perform the Grinm Advanced. But the stock apears to be less risky and, when comparing its historical volatility, PetroChina Co Ltd is 5.06 times less risky than Grinm Advanced. The stock trades about -0.17 of its potential returns per unit of risk. The Grinm Advanced Materials is currently generating about 0.71 of returns per unit of risk over similar time horizon. If you would invest  1,145  in Grinm Advanced Materials on August 27, 2024 and sell it today you would earn a total of  1,427  from holding Grinm Advanced Materials or generate 124.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PetroChina Co Ltd  vs.  Grinm Advanced Materials

 Performance 
       Timeline  
PetroChina 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PetroChina Co Ltd 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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Grinm Advanced Materials 

Risk-Adjusted Performance

35 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Grinm Advanced Materials are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grinm Advanced sustained solid returns over the last few months and may actually be approaching a breakup point.

PetroChina and Grinm Advanced Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PetroChina and Grinm Advanced

The main advantage of trading using opposite PetroChina and Grinm Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, Grinm Advanced 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 Grinm Advanced will offset losses from the drop in Grinm Advanced's long position.
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The idea behind PetroChina Co Ltd and Grinm Advanced Materials 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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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 CEOs Directory module to screen CEOs from public companies around the world.

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