Correlation Between Panda Financial and PetroChina

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

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

Diversification Opportunities for Panda Financial and PetroChina

0.66

Correlation Coefficient

Panda Financial  PetroChina

Poor diversification

The 3 months correlation between Panda and PetroChina is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Panda Financial Holding and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Panda Financial 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 Panda Financial Holding 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 Panda Financial i.e., Panda Financial and PetroChina go up and down completely randomly.

Pair Corralation between Panda Financial and PetroChina

Assuming the 90 days trading horizon Panda Financial Holding is expected to under-perform the PetroChina. In addition to that, Panda Financial is 2.18 times more volatile than PetroChina Co Ltd. It trades about -0.11 of its total potential returns per unit of risk. PetroChina Co Ltd is currently generating about -0.14 per unit of volatility. If you would invest  892.00  in PetroChina Co Ltd on December 27, 2024 and sell it today you would lose (81.00) from holding PetroChina Co Ltd or give up 9.08% of portfolio value over 90 days.

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

Panda Financial Holding  vs.  PetroChina Co Ltd

Panda Financial Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Panda Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 Panda Financial and PetroChina

The main advantage of trading using opposite Panda Financial and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panda Financial 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 Panda Financial Holding 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.