Correlation Between China Petroleum and IRPC PCL
Can any of the company-specific risk be diversified away by investing in both China Petroleum and IRPC PCL 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 China Petroleum and IRPC PCL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Petroleum Chemical and IRPC PCL NVDR , you can compare the effects of market volatilities on China Petroleum and IRPC PCL 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 China Petroleum with a short position of IRPC PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petroleum and IRPC PCL.
Diversification Opportunities for China Petroleum and IRPC PCL
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and IRPC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding China Petroleum Chemical and IRPC PCL NVDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRPC PCL NVDR and China Petroleum 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 China Petroleum Chemical are associated (or correlated) with IRPC PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRPC PCL NVDR has no effect on the direction of China Petroleum i.e., China Petroleum and IRPC PCL go up and down completely randomly.
Pair Corralation between China Petroleum and IRPC PCL
Assuming the 90 days horizon China Petroleum is expected to generate 1.36 times less return on investment than IRPC PCL. In addition to that, China Petroleum is 1.44 times more volatile than IRPC PCL NVDR . It trades about 0.05 of its total potential returns per unit of risk. IRPC PCL NVDR is currently generating about 0.1 per unit of volatility. If you would invest 3.45 in IRPC PCL NVDR on September 13, 2024 and sell it today you would earn a total of 0.10 from holding IRPC PCL NVDR or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Petroleum Chemical vs. IRPC PCL NVDR
Performance |
| Timeline |
| China Petroleum Chemical |
| IRPC PCL NVDR |
China Petroleum and IRPC PCL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petroleum and IRPC PCL
The main advantage of trading using opposite China Petroleum and IRPC PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petroleum position performs unexpectedly, IRPC PCL 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 IRPC PCL will offset losses from the drop in IRPC PCL's long position.| China Petroleum vs. HYATT HOTELS A | China Petroleum vs. Charoen Pokphand Foods | China Petroleum vs. InterContinental Hotels Group | China Petroleum vs. National Beverage Corp |
| IRPC PCL vs. PKSHA TECHNOLOGY INC | IRPC PCL vs. DISTRICT METALS | IRPC PCL vs. ADRIATIC METALS LS 013355 | IRPC PCL vs. Vishay Intertechnology |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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