Correlation Between Iat Automobile and PetroChina

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

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

Diversification Opportunities for Iat Automobile and PetroChina

-0.47

Correlation Coefficient

Iat Automobile  PetroChina

Very good diversification

The 3 months correlation between Iat and PetroChina is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Iat Automobile 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 Iat Automobile Technology 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 Iat Automobile i.e., Iat Automobile and PetroChina go up and down completely randomly.

Pair Corralation between Iat Automobile and PetroChina

Assuming the 90 days trading horizon Iat Automobile Technology is expected to generate 2.36 times more return on investment than PetroChina. However, Iat Automobile is 2.36 times more volatile than PetroChina Co Ltd. It trades about -0.02 of its potential returns per unit of risk. PetroChina Co Ltd is currently generating about -0.29 per unit of risk. If you would invest  1,133  in Iat Automobile Technology on October 26, 2024 and sell it today you would lose (31.00) from holding Iat Automobile Technology or give up 2.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Iat Automobile Technology  vs.  PetroChina Co Ltd

Iat Automobile Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iat Automobile Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Iat Automobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 somewhat strong basic indicators, PetroChina is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Iat Automobile and PetroChina

The main advantage of trading using opposite Iat Automobile and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iat Automobile 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 Iat Automobile Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.