Correlation Between China Petroleum and OMV AG
Can any of the company-specific risk be diversified away by investing in both China Petroleum and OMV AG 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 China Petroleum and OMV AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Petroleum Chemical and OMV AG PK, you can compare the effects of market volatilities on China Petroleum and OMV AG 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 China Petroleum with a short position of OMV AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petroleum and OMV AG.
Diversification Opportunities for China Petroleum and OMV AG
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and OMV is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding China Petroleum Chemical and OMV AG PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMV AG PK and China Petroleum 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 China Petroleum Chemical are associated (or correlated) with OMV AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMV AG PK has no effect on the direction of China Petroleum i.e., China Petroleum and OMV AG go up and down completely randomly.
Pair Corralation between China Petroleum and OMV AG
Assuming the 90 days horizon China Petroleum Chemical is expected to generate 12.21 times more return on investment than OMV AG. However, China Petroleum is 12.21 times more volatile than OMV AG PK. It trades about 0.08 of its potential returns per unit of risk. OMV AG PK is currently generating about 0.01 per unit of risk. If you would invest 24.00 in China Petroleum Chemical on August 28, 2024 and sell it today you would earn a total of 30.00 from holding China Petroleum Chemical or generate 125.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.3% |
| Values | Daily Returns |
China Petroleum Chemical vs. OMV AG PK
Performance |
| Timeline |
| China Petroleum Chemical |
| OMV AG PK |
China Petroleum and OMV AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petroleum and OMV AG
The main advantage of trading using opposite China Petroleum and OMV AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petroleum position performs unexpectedly, OMV AG 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 OMV AG will offset losses from the drop in OMV AG's long position.| China Petroleum vs. BP plc | China Petroleum vs. Shell PLC | China Petroleum vs. Origin Energy Ltd | China Petroleum vs. Equinor ASA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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