Correlation Between TotalEnergies and China Petroleum
Can any of the company-specific risk be diversified away by investing in both TotalEnergies and China Petroleum 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 TotalEnergies and China Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TotalEnergies SE and China Petroleum Chemical, you can compare the effects of market volatilities on TotalEnergies and China Petroleum 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 TotalEnergies with a short position of China Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of TotalEnergies and China Petroleum.
Diversification Opportunities for TotalEnergies and China Petroleum
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between TotalEnergies and China is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding TotalEnergies SE and China Petroleum Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petroleum Chemical and TotalEnergies 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 TotalEnergies SE are associated (or correlated) with China Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petroleum Chemical has no effect on the direction of TotalEnergies i.e., TotalEnergies and China Petroleum go up and down completely randomly.
Pair Corralation between TotalEnergies and China Petroleum
Assuming the 90 days horizon TotalEnergies SE is expected to generate 0.62 times more return on investment than China Petroleum. However, TotalEnergies SE is 1.61 times less risky than China Petroleum. It trades about -0.1 of its potential returns per unit of risk. China Petroleum Chemical is currently generating about -0.26 per unit of risk. If you would invest 6,350 in TotalEnergies SE on August 24, 2024 and sell it today you would lose (286.00) from holding TotalEnergies SE or give up 4.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TotalEnergies SE vs. China Petroleum Chemical
Performance |
| Timeline |
| TotalEnergies SE |
| China Petroleum Chemical |
TotalEnergies and China Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TotalEnergies and China Petroleum
The main advantage of trading using opposite TotalEnergies and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TotalEnergies position performs unexpectedly, China Petroleum 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 China Petroleum will offset losses from the drop in China Petroleum's long position.| TotalEnergies vs. Eni SpA | TotalEnergies vs. MOL PLC ADR | TotalEnergies vs. PetroChina Co Ltd | TotalEnergies vs. Equinor ASA |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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