Correlation Between PetroChina and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both PetroChina and Equinor ASA 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 and Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroChina Co Ltd and Equinor ASA, you can compare the effects of market volatilities on PetroChina and Equinor ASA 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 with a short position of Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina and Equinor ASA.
Diversification Opportunities for PetroChina and Equinor ASA
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PetroChina and Equinor is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA and PetroChina 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 Co Ltd are associated (or correlated) with Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA has no effect on the direction of PetroChina i.e., PetroChina and Equinor ASA go up and down completely randomly.
Pair Corralation between PetroChina and Equinor ASA
Assuming the 90 days horizon PetroChina is expected to generate 1.36 times less return on investment than Equinor ASA. In addition to that, PetroChina is 1.26 times more volatile than Equinor ASA. It trades about 0.02 of its total potential returns per unit of risk. Equinor ASA is currently generating about 0.03 per unit of volatility. If you would invest 2,278 in Equinor ASA on August 27, 2024 and sell it today you would earn a total of 181.00 from holding Equinor ASA or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
PetroChina Co Ltd vs. Equinor ASA
Performance |
| Timeline |
| PetroChina |
| Equinor ASA |
PetroChina and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroChina and Equinor ASA
The main advantage of trading using opposite PetroChina and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, Equinor ASA 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.| PetroChina vs. Equinor ASA ADR | PetroChina vs. TotalEnergies SE ADR | PetroChina vs. Ecopetrol SA ADR | PetroChina vs. National Fuel Gas |
| Equinor ASA vs. Equinor ASA ADR | Equinor ASA vs. TotalEnergies SE ADR | Equinor ASA vs. Ecopetrol SA ADR | Equinor ASA vs. National Fuel Gas |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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