Correlation Between YLZ Information and PetroChina

Can any of the company-specific risk be diversified away by investing in both YLZ Information 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 YLZ Information and PetroChina into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YLZ Information Tech and PetroChina Co Ltd, you can compare the effects of market volatilities on YLZ Information 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 YLZ Information with a short position of PetroChina. Check out your portfolio center. Please also check ongoing floating volatility patterns of YLZ Information and PetroChina.

Diversification Opportunities for YLZ Information and PetroChina

-0.78

Correlation Coefficient

YLZ Information  PetroChina

Pay attention - limited upside

The 3 months correlation between YLZ and PetroChina is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding YLZ Information Tech and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and YLZ Information 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 YLZ Information Tech 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 YLZ Information i.e., YLZ Information and PetroChina go up and down completely randomly.

Pair Corralation between YLZ Information and PetroChina

Assuming the 90 days trading horizon YLZ Information Tech is expected to generate 2.2 times more return on investment than PetroChina. However, YLZ Information is 2.2 times more volatile than PetroChina Co Ltd. It trades about 0.12 of its potential returns per unit of risk. PetroChina Co Ltd is currently generating about -0.15 per unit of risk. If you would invest  324.00  in YLZ Information Tech on December 26, 2024 and sell it today you would earn a total of  54.00  from holding YLZ Information Tech or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

YLZ Information Tech  vs.  PetroChina Co Ltd

YLZ Information Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YLZ Information Tech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YLZ Information sustained solid returns over the last few months and may actually be approaching a breakup point.

PetroChina

Risk-Adjusted Performance

Very Weak

Over the last 90 days PetroChina Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with YLZ Information and PetroChina

The main advantage of trading using opposite YLZ Information and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YLZ Information 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 YLZ Information Tech 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.