Correlation Between PetroChina Company and Dow Jones
Can any of the company-specific risk be diversified away by investing in both PetroChina Company and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on PetroChina Company and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina Company and Dow Jones.
Diversification Opportunities for PetroChina Company and Dow Jones
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PetroChina and Dow is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Company Limited and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of PetroChina Company i.e., PetroChina Company and Dow Jones go up and down completely randomly.
Pair Corralation between PetroChina Company and Dow Jones
Assuming the 90 days horizon PetroChina Company Limited is expected to generate 7.14 times more return on investment than Dow Jones. However, PetroChina Company is 7.14 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 45.00 in PetroChina Company Limited on August 30, 2024 and sell it today you would earn a total of 22.00 from holding PetroChina Company Limited or generate 48.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
PetroChina Company Limited vs. Dow Jones Industrial
Performance |
| Timeline |
PetroChina Company and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
PetroChina Company Limited
Pair trading matchups for PetroChina Company
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with PetroChina Company and Dow Jones
The main advantage of trading using opposite PetroChina Company and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina Company position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| PetroChina Company vs. Diamyd Medical AB | PetroChina Company vs. Motorcar Parts of | PetroChina Company vs. HK Electric Investments | PetroChina Company vs. CompuGroup Medical SE |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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