Correlation Between PetroChina and Linkage Software
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By analyzing existing cross correlation between PetroChina Co Ltd and Linkage Software Co, you can compare the effects of market volatilities on PetroChina and Linkage Software 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 Linkage Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina and Linkage Software.
Diversification Opportunities for PetroChina and Linkage Software
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PetroChina and Linkage is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Linkage Software Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linkage Software 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 Linkage Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linkage Software has no effect on the direction of PetroChina i.e., PetroChina and Linkage Software go up and down completely randomly.
Pair Corralation between PetroChina and Linkage Software
Assuming the 90 days trading horizon PetroChina Co Ltd is expected to under-perform the Linkage Software. But the stock apears to be less risky and, when comparing its historical volatility, PetroChina Co Ltd is 1.82 times less risky than Linkage Software. The stock trades about -0.4 of its potential returns per unit of risk. The Linkage Software Co is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,288 in Linkage Software Co on November 9, 2024 and sell it today you would earn a total of 166.00 from holding Linkage Software Co or generate 12.89% 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. Linkage Software Co
Performance |
| Timeline |
| PetroChina |
Risk-Adjusted Performance
Weak
Weak | Strong |
| Linkage Software |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
PetroChina and Linkage Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroChina and Linkage Software
The main advantage of trading using opposite PetroChina and Linkage Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, Linkage Software 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 Linkage Software will offset losses from the drop in Linkage Software's long position.The idea behind PetroChina Co Ltd and Linkage Software Co 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.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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