Correlation Between Gem-Year Industrial and PetroChina

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

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

Diversification Opportunities for Gem-Year Industrial and PetroChina

-0.61

Correlation Coefficient

Gem-Year Industrial  PetroChina

Excellent diversification

The 3 months correlation between Gem-Year and PetroChina is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gem Year Industrial Co and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Gem-Year Industrial 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 Gem Year Industrial 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 Gem-Year Industrial i.e., Gem-Year Industrial and PetroChina go up and down completely randomly.

Pair Corralation between Gem-Year Industrial and PetroChina

Assuming the 90 days trading horizon Gem Year Industrial Co is expected to generate 1.68 times more return on investment than PetroChina. However, Gem-Year Industrial is 1.68 times more volatile than PetroChina Co Ltd. It trades about 0.06 of its potential returns per unit of risk. PetroChina Co Ltd is currently generating about -0.02 per unit of risk. If you would invest  459.00  in Gem Year Industrial Co on December 1, 2024 and sell it today you would earn a total of  29.00  from holding Gem Year Industrial Co or generate 6.32% return on investment over 90 days.

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

Gem Year Industrial Co  vs.  PetroChina Co Ltd

Gem Year Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem-Year Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 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 Gem-Year Industrial and PetroChina

The main advantage of trading using opposite Gem-Year Industrial and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gem-Year Industrial 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 Gem Year Industrial 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.