Correlation Between IRPC PCL and China Petroleum
Can any of the company-specific risk be diversified away by investing in both IRPC PCL and China Petroleum 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 IRPC PCL and China Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IRPC PCL NVDR and China Petroleum Chemical, you can compare the effects of market volatilities on IRPC PCL and China Petroleum 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 IRPC PCL with a short position of China Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of IRPC PCL and China Petroleum.
Diversification Opportunities for IRPC PCL and China Petroleum
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IRPC and China is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding IRPC PCL NVDR and China Petroleum Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petroleum Chemical and IRPC PCL 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 IRPC PCL NVDR are associated (or correlated) with China Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petroleum Chemical has no effect on the direction of IRPC PCL i.e., IRPC PCL and China Petroleum go up and down completely randomly.
Pair Corralation between IRPC PCL and China Petroleum
Assuming the 90 days trading horizon IRPC PCL NVDR is expected to generate 0.69 times more return on investment than China Petroleum. However, IRPC PCL NVDR is 1.44 times less risky than China Petroleum. It trades about 0.1 of its potential returns per unit of risk. China Petroleum Chemical is currently generating about 0.05 per unit of risk. 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 |
IRPC PCL NVDR vs. China Petroleum Chemical
Performance |
| Timeline |
| IRPC PCL NVDR |
| China Petroleum Chemical |
IRPC PCL and China Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IRPC PCL and China Petroleum
The main advantage of trading using opposite IRPC PCL and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IRPC PCL position performs unexpectedly, China Petroleum 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 China Petroleum will offset losses from the drop in China Petroleum's long position.| IRPC PCL vs. PKSHA TECHNOLOGY INC | IRPC PCL vs. DISTRICT METALS | IRPC PCL vs. ADRIATIC METALS LS 013355 | IRPC PCL vs. Vishay Intertechnology |
| China Petroleum vs. HYATT HOTELS A | China Petroleum vs. Charoen Pokphand Foods | China Petroleum vs. InterContinental Hotels Group | China Petroleum vs. National Beverage Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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