Correlation Between PetroChina and Camelot Electronics

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

Diversification Opportunities for PetroChina and Camelot Electronics

-0.38

Correlation Coefficient

PetroChina  Camelot Electronics

Very good diversification

The 3 months correlation between PetroChina and Camelot is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Camelot Electronics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camelot Electronics 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 Camelot Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camelot Electronics has no effect on the direction of PetroChina i.e., PetroChina and Camelot Electronics go up and down completely randomly.

Pair Corralation between PetroChina and Camelot Electronics

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to generate 0.55 times more return on investment than Camelot Electronics. However, PetroChina Co Ltd is 1.82 times less risky than Camelot Electronics. It trades about 0.14 of its potential returns per unit of risk. Camelot Electronics Technology is currently generating about -0.16 per unit of risk. If you would invest  845.00  in PetroChina Co Ltd on October 12, 2024 and sell it today you would earn a total of  37.00  from holding PetroChina Co Ltd or generate 4.38% 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.  Camelot Electronics Technology

PetroChina

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Co Ltd are ranked lower than 1 (%) 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.

Camelot Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camelot Electronics Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Camelot Electronics 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 Camelot Electronics

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

The idea behind PetroChina Co Ltd and Camelot Electronics Technology 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.