Correlation Between PetroChina and ShenZhen Yitoa

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

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

Diversification Opportunities for PetroChina and ShenZhen Yitoa

-0.44

Correlation Coefficient

PetroChina  ShenZhen Yitoa

Very good diversification

The 3 months correlation between PetroChina and ShenZhen is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and ShenZhen Yitoa Intelligent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShenZhen Yitoa Intel and PetroChina 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 PetroChina Co Ltd are associated (or correlated) with ShenZhen Yitoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShenZhen Yitoa Intel has no effect on the direction of PetroChina i.e., PetroChina and ShenZhen Yitoa go up and down completely randomly.

Pair Corralation between PetroChina and ShenZhen Yitoa

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to under-perform the ShenZhen Yitoa. But the stock apears to be less risky and, when comparing its historical volatility, PetroChina Co Ltd is 3.12 times less risky than ShenZhen Yitoa. The stock trades about -0.14 of its potential returns per unit of risk. The ShenZhen Yitoa Intelligent is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  800.00  in ShenZhen Yitoa Intelligent on December 28, 2024 and sell it today you would lose (9.00) from holding ShenZhen Yitoa Intelligent or give up 1.12% of portfolio value over 90 days.

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

PetroChina Co Ltd  vs.  ShenZhen Yitoa Intelligent

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.

ShenZhen Yitoa Intel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ShenZhen Yitoa Intelligent are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ShenZhen Yitoa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PetroChina and ShenZhen Yitoa

The main advantage of trading using opposite PetroChina and ShenZhen Yitoa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroChina position performs unexpectedly, ShenZhen Yitoa 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 ShenZhen Yitoa will offset losses from the drop in ShenZhen Yitoa's long position.

The idea behind PetroChina Co Ltd and ShenZhen Yitoa Intelligent 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.