Correlation Between Shenzhen Hans and PetroChina

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

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

Diversification Opportunities for Shenzhen Hans and PetroChina

-0.06

Correlation Coefficient

Shenzhen Hans  PetroChina

Good diversification

The 3 months correlation between Shenzhen and PetroChina is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Hans CNC and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Shenzhen Hans 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 Shenzhen Hans CNC 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 Shenzhen Hans i.e., Shenzhen Hans and PetroChina go up and down completely randomly.

Pair Corralation between Shenzhen Hans and PetroChina

Assuming the 90 days trading horizon Shenzhen Hans is expected to generate 1.48 times less return on investment than PetroChina. In addition to that, Shenzhen Hans is 2.16 times more volatile than PetroChina Co Ltd. It trades about 0.02 of its total potential returns per unit of risk. PetroChina Co Ltd is currently generating about 0.05 per unit of volatility. If you would invest  870.00  in PetroChina Co Ltd on October 11, 2024 and sell it today you would earn a total of  35.00  from holding PetroChina Co Ltd or generate 4.02% return on investment over 90 days.

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

Shenzhen Hans CNC  vs.  PetroChina Co Ltd

Shenzhen Hans CNC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Hans CNC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen Hans 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

4 of 100

Insignificant

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 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 Shenzhen Hans and PetroChina

The main advantage of trading using opposite Shenzhen Hans and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Hans 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 Shenzhen Hans CNC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.