Correlation Between China Petroleum and Shell PLC
Can any of the company-specific risk be diversified away by investing in both China Petroleum and Shell PLC 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 Shell PLC 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 Shell PLC, you can compare the effects of market volatilities on China Petroleum and Shell PLC 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 Shell PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Petroleum and Shell PLC.
Diversification Opportunities for China Petroleum and Shell PLC
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Shell is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding China Petroleum Chemical and Shell PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell PLC 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 Shell PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell PLC has no effect on the direction of China Petroleum i.e., China Petroleum and Shell PLC go up and down completely randomly.
Pair Corralation between China Petroleum and Shell PLC
Assuming the 90 days horizon China Petroleum Chemical is expected to under-perform the Shell PLC. In addition to that, China Petroleum is 1.06 times more volatile than Shell PLC. It trades about -0.27 of its total potential returns per unit of risk. Shell PLC is currently generating about 0.03 per unit of volatility. If you would invest 3,194 in Shell PLC on August 24, 2024 and sell it today you would earn a total of 26.00 from holding Shell PLC or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Petroleum Chemical vs. Shell PLC
Performance |
| Timeline |
| China Petroleum Chemical |
| Shell PLC |
China Petroleum and Shell PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Petroleum and Shell PLC
The main advantage of trading using opposite China Petroleum and Shell PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Petroleum position performs unexpectedly, Shell PLC 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 Shell PLC will offset losses from the drop in Shell PLC's long position.| China Petroleum vs. Shell PLC ADR | China Petroleum vs. Equinor ASA ADR | China Petroleum vs. BP PLC ADR | China Petroleum vs. Eni SpA ADR |
| Shell PLC vs. Eni SpA | Shell PLC vs. MOL PLC ADR | Shell PLC vs. PetroChina Co Ltd | Shell PLC 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |