Correlation Between China Petroleum and Exxon Mobil
Can any of the company-specific risk be diversified away by investing in both China Petroleum and Exxon Mobil 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 Exxon Mobil 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 Exxon Mobil, you can compare the effects of market volatilities on China Petroleum and Exxon Mobil 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 Exxon Mobil. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petroleum and Exxon Mobil.
Diversification Opportunities for China Petroleum and Exxon Mobil
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Exxon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding China Petroleum Chemical and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil 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 Exxon Mobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil has no effect on the direction of China Petroleum i.e., China Petroleum and Exxon Mobil go up and down completely randomly.
Pair Corralation between China Petroleum and Exxon Mobil
Assuming the 90 days horizon China Petroleum Chemical is expected to under-perform the Exxon Mobil. In addition to that, China Petroleum is 1.52 times more volatile than Exxon Mobil. It trades about -0.03 of its total potential returns per unit of risk. Exxon Mobil is currently generating about 0.17 per unit of volatility. If you would invest 10,598 in Exxon Mobil on September 2, 2024 and sell it today you would earn a total of 574.00 from holding Exxon Mobil or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Petroleum Chemical vs. Exxon Mobil
Performance |
| Timeline |
| China Petroleum Chemical |
| Exxon Mobil |
China Petroleum and Exxon Mobil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petroleum and Exxon Mobil
The main advantage of trading using opposite China Petroleum and Exxon Mobil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petroleum position performs unexpectedly, Exxon Mobil 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 Exxon Mobil will offset losses from the drop in Exxon Mobil's long position.| China Petroleum vs. Exxon Mobil | China Petroleum vs. Chevron | China Petroleum vs. Chevron | China Petroleum vs. TotalEnergies SE |
| Exxon Mobil vs. Apple Inc | Exxon Mobil vs. Apple Inc | Exxon Mobil vs. Apple Inc | Exxon Mobil vs. Apple Inc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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