Correlation Between PetroChina and China Everbright
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By analyzing existing cross correlation between PetroChina Co Ltd and China Everbright Bank, you can compare the effects of market volatilities on PetroChina and China Everbright 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 Everbright. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina and China Everbright.
Diversification Opportunities for PetroChina and China Everbright
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PetroChina and China is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and China Everbright Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Everbright Bank 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 Everbright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Everbright Bank has no effect on the direction of PetroChina i.e., PetroChina and China Everbright go up and down completely randomly.
Pair Corralation between PetroChina and China Everbright
Assuming the 90 days trading horizon PetroChina Co Ltd is expected to under-perform the China Everbright. But the stock apears to be less risky and, when comparing its historical volatility, PetroChina Co Ltd is 1.3 times less risky than China Everbright. The stock trades about -0.28 of its potential returns per unit of risk. The China Everbright Bank is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 383.00 in China Everbright Bank on October 26, 2024 and sell it today you would earn a total of 4.00 from holding China Everbright Bank or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroChina Co Ltd vs. China Everbright Bank
Performance |
| Timeline |
| PetroChina |
| China Everbright Bank |
PetroChina and China Everbright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroChina and China Everbright
The main advantage of trading using opposite PetroChina and China Everbright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, China Everbright 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 Everbright will offset losses from the drop in China Everbright's long position.| PetroChina vs. Heilongjiang Transport Development | PetroChina vs. Unisplendour Corp | PetroChina vs. Strait Innovation Internet | PetroChina vs. Beijing Seeyon Internet |
| China Everbright vs. China Life Insurance | China Everbright vs. Cinda Securities Co | China Everbright vs. Piotech Inc A | China Everbright vs. Dongxing Sec 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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