Correlation Between PetroChina and Kunwu Jiuding

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

Diversification Opportunities for PetroChina and Kunwu Jiuding

0.38

Correlation Coefficient

PetroChina  Kunwu Jiuding

Weak diversification

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

Pair Corralation between PetroChina and Kunwu Jiuding

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to under-perform the Kunwu Jiuding. But the stock apears to be less risky and, when comparing its historical volatility, PetroChina Co Ltd is 2.57 times less risky than Kunwu Jiuding. The stock trades about -0.15 of its potential returns per unit of risk. The Kunwu Jiuding Investment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,441  in Kunwu Jiuding Investment on December 26, 2024 and sell it today you would lose (122.00) from holding Kunwu Jiuding Investment or give up 8.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

PetroChina Co Ltd  vs.  Kunwu Jiuding Investment

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.

Kunwu Jiuding Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kunwu Jiuding Investment 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 PetroChina and Kunwu Jiuding

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

The idea behind PetroChina Co Ltd and Kunwu Jiuding Investment 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.