Correlation Between PetroChina and Jinsanjiang Silicon

Can any of the company-specific risk be diversified away by investing in both PetroChina and Jinsanjiang Silicon 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 Jinsanjiang Silicon 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 Jinsanjiang Silicon Material, you can compare the effects of market volatilities on PetroChina and Jinsanjiang Silicon 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 Jinsanjiang Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina and Jinsanjiang Silicon.

Diversification Opportunities for PetroChina and Jinsanjiang Silicon

-0.12

Correlation Coefficient

PetroChina  Jinsanjiang Silicon

Good diversification

The 3 months correlation between PetroChina and Jinsanjiang is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Jinsanjiang Silicon Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinsanjiang Silicon 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 Jinsanjiang Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinsanjiang Silicon has no effect on the direction of PetroChina i.e., PetroChina and Jinsanjiang Silicon go up and down completely randomly.

Pair Corralation between PetroChina and Jinsanjiang Silicon

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to generate 0.39 times more return on investment than Jinsanjiang Silicon. However, PetroChina Co Ltd is 2.56 times less risky than Jinsanjiang Silicon. It trades about 0.12 of its potential returns per unit of risk. Jinsanjiang Silicon Material is currently generating about 0.05 per unit of risk. If you would invest  828.00  in PetroChina Co Ltd on October 6, 2024 and sell it today you would earn a total of  57.00  from holding PetroChina Co Ltd or generate 6.88% return on investment over 90 days.

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

PetroChina Co Ltd  vs.  Jinsanjiang Silicon Material

PetroChina

Risk-Adjusted Performance

0 of 100

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.

Jinsanjiang Silicon

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jinsanjiang Silicon Material are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinsanjiang Silicon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PetroChina and Jinsanjiang Silicon

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

The idea behind PetroChina Co Ltd and Jinsanjiang Silicon Material 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.