Correlation Between Kuangda Technology and PetroChina

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Can any of the company-specific risk be diversified away by investing in both Kuangda Technology and PetroChina 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 Kuangda Technology and PetroChina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kuangda Technology Group and PetroChina Co Ltd, you can compare the effects of market volatilities on Kuangda Technology and PetroChina 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 Kuangda Technology with a short position of PetroChina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuangda Technology and PetroChina.

Diversification Opportunities for Kuangda Technology and PetroChina

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Kuangda and PetroChina is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kuangda Technology Group and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Kuangda Technology 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 Kuangda Technology Group are associated (or correlated) with PetroChina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroChina has no effect on the direction of Kuangda Technology i.e., Kuangda Technology and PetroChina go up and down completely randomly.

Pair Corralation between Kuangda Technology and PetroChina

Assuming the 90 days trading horizon Kuangda Technology Group is expected to generate 1.75 times more return on investment than PetroChina. However, Kuangda Technology is 1.75 times more volatile than PetroChina Co Ltd. It trades about 0.21 of its potential returns per unit of risk. PetroChina Co Ltd is currently generating about 0.06 per unit of risk. If you would invest  384.00  in Kuangda Technology Group on September 12, 2024 and sell it today you would earn a total of  197.00  from holding Kuangda Technology Group or generate 51.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Kuangda Technology Group  vs.  PetroChina Co Ltd

 Performance 
       Timeline  
Kuangda Technology 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Kuangda Technology Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kuangda Technology sustained solid returns over the last few months and may actually be approaching a breakup point.
PetroChina 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Co Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PetroChina may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kuangda Technology and PetroChina Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kuangda Technology and PetroChina

The main advantage of trading using opposite Kuangda Technology and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuangda Technology position performs unexpectedly, PetroChina 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 PetroChina will offset losses from the drop in PetroChina's long position.
The idea behind Kuangda Technology Group and PetroChina Co Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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