Correlation Between PetroChina Company and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both PetroChina Company and Sinopec Shanghai 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 Sinopec Shanghai 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 Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on PetroChina Company and Sinopec Shanghai 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 Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina Company and Sinopec Shanghai.
Diversification Opportunities for PetroChina Company and Sinopec Shanghai
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PetroChina and Sinopec is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Company Limited and Sinopec Shanghai Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Shanghai Pet 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 Sinopec Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Shanghai Pet has no effect on the direction of PetroChina Company i.e., PetroChina Company and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between PetroChina Company and Sinopec Shanghai
Assuming the 90 days horizon PetroChina Company is expected to generate 1.89 times less return on investment than Sinopec Shanghai. But when comparing it to its historical volatility, PetroChina Company Limited is 3.32 times less risky than Sinopec Shanghai. It trades about 0.14 of its potential returns per unit of risk. Sinopec Shanghai Petrochemical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Sinopec Shanghai Petrochemical on September 13, 2024 and sell it today you would earn a total of 1.00 from holding Sinopec Shanghai Petrochemical or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
PetroChina Company Limited vs. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| PetroChina Limited |
| Sinopec Shanghai Pet |
PetroChina Company and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroChina Company and Sinopec Shanghai
The main advantage of trading using opposite PetroChina Company and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina Company position performs unexpectedly, Sinopec Shanghai 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 Sinopec Shanghai will offset losses from the drop in Sinopec Shanghai's long position.| PetroChina Company vs. UNIVMUSIC GRPADR050 | PetroChina Company vs. Focus Home Interactive | PetroChina Company vs. Corporate Office Properties | PetroChina Company vs. Compagnie Plastic Omnium |
| Sinopec Shanghai vs. Superior Plus Corp | Sinopec Shanghai vs. SIVERS SEMICONDUCTORS AB | Sinopec Shanghai vs. Norsk Hydro ASA | Sinopec Shanghai vs. Reliance Steel Aluminum |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |