Correlation Between PetroChina Company and IRPC Public
Can any of the company-specific risk be diversified away by investing in both PetroChina Company and IRPC Public 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 IRPC Public 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 IRPC Public, you can compare the effects of market volatilities on PetroChina Company and IRPC Public 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 IRPC Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina Company and IRPC Public.
Diversification Opportunities for PetroChina Company and IRPC Public
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between PetroChina and IRPC is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Company Limited and IRPC Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRPC Public 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 IRPC Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRPC Public has no effect on the direction of PetroChina Company i.e., PetroChina Company and IRPC Public go up and down completely randomly.
Pair Corralation between PetroChina Company and IRPC Public
Assuming the 90 days horizon PetroChina Company Limited is expected to generate 0.35 times more return on investment than IRPC Public. However, PetroChina Company Limited is 2.9 times less risky than IRPC Public. It trades about 0.11 of its potential returns per unit of risk. IRPC Public is currently generating about 0.03 per unit of risk. If you would invest 27.00 in PetroChina Company Limited on September 12, 2024 and sell it today you would earn a total of 44.00 from holding PetroChina Company Limited or generate 162.96% 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. IRPC Public
Performance |
| Timeline |
| PetroChina Limited |
| IRPC Public |
PetroChina Company and IRPC Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroChina Company and IRPC Public
The main advantage of trading using opposite PetroChina Company and IRPC Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina Company position performs unexpectedly, IRPC Public 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 IRPC Public will offset losses from the drop in IRPC Public's long position.| PetroChina Company vs. Apple Inc | PetroChina Company vs. Apple Inc | PetroChina Company vs. Apple Inc | PetroChina Company vs. Apple Inc |
| IRPC Public vs. IRPC PCL NVDR | IRPC Public vs. Sinopec Shanghai Petrochemical | IRPC Public vs. China Petroleum Chemical | IRPC Public vs. PetroChina Company Limited |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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