Correlation Between Heren Health and PetroChina

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

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

Diversification Opportunities for Heren Health and PetroChina

-0.22

Correlation Coefficient

Heren Health  PetroChina

Very good diversification

The 3 months correlation between Heren and PetroChina is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Heren Health Co and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Heren Health 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 Heren Health Co 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 Heren Health i.e., Heren Health and PetroChina go up and down completely randomly.

Pair Corralation between Heren Health and PetroChina

Assuming the 90 days trading horizon Heren Health Co is expected to generate 1.93 times more return on investment than PetroChina. However, Heren Health is 1.93 times more volatile than PetroChina Co Ltd. It trades about 0.16 of its potential returns per unit of risk. PetroChina Co Ltd is currently generating about -0.07 per unit of risk. If you would invest  1,012  in Heren Health Co on September 2, 2024 and sell it today you would earn a total of  446.00  from holding Heren Health Co or generate 44.07% return on investment over 90 days.

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

Heren Health Co  vs.  PetroChina Co Ltd

Heren Health

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heren Health Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heren Health sustained solid returns over the last few months and may actually be approaching a breakup point.

PetroChina

Risk-Adjusted Performance

0 of 100

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 Heren Health and PetroChina

The main advantage of trading using opposite Heren Health and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heren Health 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 Heren Health Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..