Correlation Between PetroChina Company and Chevron
Can any of the company-specific risk be diversified away by investing in both PetroChina Company and Chevron 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 PetroChina Company and Chevron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroChina Company Limited and Chevron, you can compare the effects of market volatilities on PetroChina Company and Chevron 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 PetroChina Company with a short position of Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina Company and Chevron.
Diversification Opportunities for PetroChina Company and Chevron
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PetroChina and Chevron is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Company Limited and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron and PetroChina Company 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 PetroChina Company Limited are associated (or correlated) with Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of PetroChina Company i.e., PetroChina Company and Chevron go up and down completely randomly.
Pair Corralation between PetroChina Company and Chevron
Assuming the 90 days horizon PetroChina Company is expected to generate 8.64 times less return on investment than Chevron. But when comparing it to its historical volatility, PetroChina Company Limited is 1.11 times less risky than Chevron. It trades about 0.01 of its potential returns per unit of risk. Chevron is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 14,873 in Chevron on December 1, 2024 and sell it today you would earn a total of 183.00 from holding Chevron or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroChina Company Limited vs. Chevron
Performance |
| Timeline |
| PetroChina Limited |
| Chevron |
PetroChina Company and Chevron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroChina Company and Chevron
The main advantage of trading using opposite PetroChina Company and Chevron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina Company position performs unexpectedly, Chevron 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 Chevron will offset losses from the drop in Chevron's long position.| PetroChina Company vs. CENTURIA OFFICE REIT | PetroChina Company vs. AEON METALS LTD | PetroChina Company vs. ADRIATIC METALS LS 013355 | PetroChina Company vs. Cleanaway Waste Management |
| Chevron vs. AEON METALS LTD | Chevron vs. HK Electric Investments | Chevron vs. ECHO INVESTMENT ZY | Chevron vs. Jacquet Metal Service |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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