Correlation Between Imeik Technology and PetroChina

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

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

Diversification Opportunities for Imeik Technology and PetroChina

0.58

Correlation Coefficient

Imeik Technology  PetroChina

Very weak diversification

The 3 months correlation between Imeik and PetroChina is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Imeik Technology Development and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Imeik 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 Imeik Technology Development 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 Imeik Technology i.e., Imeik Technology and PetroChina go up and down completely randomly.

Pair Corralation between Imeik Technology and PetroChina

Assuming the 90 days trading horizon Imeik Technology is expected to generate 2.15 times less return on investment than PetroChina. In addition to that, Imeik Technology is 1.8 times more volatile than PetroChina Co Ltd. It trades about 0.01 of its total potential returns per unit of risk. PetroChina Co Ltd is currently generating about 0.04 per unit of volatility. If you would invest  733.00  in PetroChina Co Ltd on September 19, 2024 and sell it today you would earn a total of  118.00  from holding PetroChina Co Ltd or generate 16.1% return on investment over 90 days.

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

Imeik Technology Development  vs.  PetroChina Co Ltd

Imeik Technology Dev

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Imeik Technology Development are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Imeik Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

PetroChina

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Co Ltd are ranked lower than 5 (%) 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.

Pair Trading with Imeik Technology and PetroChina

The main advantage of trading using opposite Imeik Technology and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imeik 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 Imeik Technology Development 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.