Correlation Between China Petroleum and Repsol SA
Can any of the company-specific risk be diversified away by investing in both China Petroleum and Repsol SA 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 Repsol SA 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 Repsol SA, you can compare the effects of market volatilities on China Petroleum and Repsol SA 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 Repsol SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petroleum and Repsol SA.
Diversification Opportunities for China Petroleum and Repsol SA
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Repsol is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding China Petroleum Chemical and Repsol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol SA 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 Repsol SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol SA has no effect on the direction of China Petroleum i.e., China Petroleum and Repsol SA go up and down completely randomly.
Pair Corralation between China Petroleum and Repsol SA
If you would invest 1,583 in Repsol SA on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Repsol SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
China Petroleum Chemical vs. Repsol SA
Performance |
| Timeline |
| China Petroleum Chemical |
| Repsol SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China Petroleum and Repsol SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petroleum and Repsol SA
The main advantage of trading using opposite China Petroleum and Repsol SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petroleum position performs unexpectedly, Repsol SA 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 Repsol SA will offset losses from the drop in Repsol SA's long position.| China Petroleum vs. Equinor ASA ADR | China Petroleum vs. TotalEnergies SE ADR | China Petroleum vs. Ecopetrol SA ADR | China Petroleum 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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