Correlation Between Galp Energia and PetroChina
Can any of the company-specific risk be diversified away by investing in both Galp Energia and PetroChina 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 Galp Energia and PetroChina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galp Energia SGPS and PetroChina Co Ltd, you can compare the effects of market volatilities on Galp Energia and PetroChina 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 Galp Energia with a short position of PetroChina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galp Energia and PetroChina.
Diversification Opportunities for Galp Energia and PetroChina
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Galp and PetroChina is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Galp Energia SGPS and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Galp Energia 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 Galp Energia SGPS are associated (or correlated) with PetroChina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroChina has no effect on the direction of Galp Energia i.e., Galp Energia and PetroChina go up and down completely randomly.
Pair Corralation between Galp Energia and PetroChina
Assuming the 90 days horizon Galp Energia SGPS is expected to under-perform the PetroChina. In addition to that, Galp Energia is 1.06 times more volatile than PetroChina Co Ltd. It trades about -0.23 of its total potential returns per unit of risk. PetroChina Co Ltd is currently generating about -0.01 per unit of volatility. If you would invest 72.00 in PetroChina Co Ltd on August 28, 2024 and sell it today you would lose (1.00) from holding PetroChina Co Ltd or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Galp Energia SGPS vs. PetroChina Co Ltd
Performance |
| Timeline |
| Galp Energia SGPS |
| PetroChina |
Galp Energia and PetroChina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galp Energia and PetroChina
The main advantage of trading using opposite Galp Energia and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galp Energia position performs unexpectedly, PetroChina 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 PetroChina will offset losses from the drop in PetroChina's long position.| Galp Energia vs. Equinor ASA ADR | Galp Energia vs. TotalEnergies SE ADR | Galp Energia vs. Ecopetrol SA ADR | Galp Energia vs. National Fuel Gas |
| PetroChina vs. Equinor ASA ADR | PetroChina vs. TotalEnergies SE ADR | PetroChina vs. Ecopetrol SA ADR | PetroChina vs. National Fuel Gas |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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