Correlation Between PetroChina and Loongson Technology
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By analyzing existing cross correlation between PetroChina Co Ltd and Loongson Technology Corp, you can compare the effects of market volatilities on PetroChina and Loongson Technology 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 Loongson Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina and Loongson Technology.
Diversification Opportunities for PetroChina and Loongson Technology
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PetroChina and Loongson is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Loongson Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loongson Technology Corp 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 Loongson Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loongson Technology Corp has no effect on the direction of PetroChina i.e., PetroChina and Loongson Technology go up and down completely randomly.
Pair Corralation between PetroChina and Loongson Technology
Assuming the 90 days trading horizon PetroChina Co Ltd is expected to under-perform the Loongson Technology. But the stock apears to be less risky and, when comparing its historical volatility, PetroChina Co Ltd is 3.88 times less risky than Loongson Technology. The stock trades about -0.17 of its potential returns per unit of risk. The Loongson Technology Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 13,835 in Loongson Technology Corp on August 29, 2024 and sell it today you would earn a total of 1,444 from holding Loongson Technology Corp or generate 10.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroChina Co Ltd vs. Loongson Technology Corp
Performance |
| Timeline |
| PetroChina |
| Loongson Technology Corp |
PetroChina and Loongson Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroChina and Loongson Technology
The main advantage of trading using opposite PetroChina and Loongson Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, Loongson Technology 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 Loongson Technology will offset losses from the drop in Loongson Technology's long position.| PetroChina vs. Jahen Household Products | PetroChina vs. China Railway Materials | PetroChina vs. Shaanxi Meineng Clean | PetroChina vs. Guangzhou Seagull Kitchen |
| Loongson Technology vs. Lutian Machinery Co | Loongson Technology vs. China Longyuan Power | Loongson Technology vs. Changshu Tongrun Auto | Loongson Technology vs. PetroChina Co Ltd |
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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