Correlation Between PetroChina and Oppein Home

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

Diversification Opportunities for PetroChina and Oppein Home

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between PetroChina and Oppein is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Oppein Home Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppein Home Group 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 Oppein Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppein Home Group has no effect on the direction of PetroChina i.e., PetroChina and Oppein Home go up and down completely randomly.

Pair Corralation between PetroChina and Oppein Home

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to generate 0.78 times more return on investment than Oppein Home. However, PetroChina Co Ltd is 1.28 times less risky than Oppein Home. It trades about -0.18 of its potential returns per unit of risk. Oppein Home Group is currently generating about -0.28 per unit of risk. If you would invest  878.00  in PetroChina Co Ltd on October 25, 2024 and sell it today you would lose (55.00) from holding PetroChina Co Ltd or give up 6.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PetroChina Co Ltd  vs.  Oppein Home Group

 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 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.
Oppein Home Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Oppein Home Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Oppein Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PetroChina and Oppein Home Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PetroChina and Oppein Home

The main advantage of trading using opposite PetroChina and Oppein Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, Oppein Home 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 Oppein Home will offset losses from the drop in Oppein Home's long position.
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The idea behind PetroChina Co Ltd and Oppein Home Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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