Correlation Between Marvell Technology and PetroChina
Can any of the company-specific risk be diversified away by investing in both Marvell Technology 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 Marvell Technology and PetroChina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marvell Technology Group and PetroChina Co Ltd, you can compare the effects of market volatilities on Marvell Technology 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 Marvell Technology with a short position of PetroChina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvell Technology and PetroChina.
Diversification Opportunities for Marvell Technology and PetroChina
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Marvell and PetroChina is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology Group and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Marvell Technology 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 Marvell Technology Group 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 Marvell Technology i.e., Marvell Technology and PetroChina go up and down completely randomly.
Pair Corralation between Marvell Technology and PetroChina
Given the investment horizon of 90 days Marvell Technology Group is expected to generate 0.94 times more return on investment than PetroChina. However, Marvell Technology Group is 1.06 times less risky than PetroChina. It trades about 0.08 of its potential returns per unit of risk. PetroChina Co Ltd is currently generating about 0.04 per unit of risk. If you would invest 5,553 in Marvell Technology Group on August 26, 2024 and sell it today you would earn a total of 3,698 from holding Marvell Technology Group or generate 66.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Marvell Technology Group vs. PetroChina Co Ltd
Performance |
| Timeline |
| Marvell Technology |
| PetroChina |
Marvell Technology and PetroChina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marvell Technology and PetroChina
The main advantage of trading using opposite Marvell Technology and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology 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.The idea behind Marvell Technology Group and PetroChina Co Ltd 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.| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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