Correlation Between PetroChina and Keda Clean

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

Diversification Opportunities for PetroChina and Keda Clean

-0.31

Correlation Coefficient

PetroChina  Keda Clean

Very good diversification

The 3 months correlation between PetroChina and Keda is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Keda Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keda Clean Energy 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 Keda Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keda Clean Energy has no effect on the direction of PetroChina i.e., PetroChina and Keda Clean go up and down completely randomly.

Pair Corralation between PetroChina and Keda Clean

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to generate 1.01 times more return on investment than Keda Clean. However, PetroChina is 1.01 times more volatile than Keda Clean Energy. It trades about 0.07 of its potential returns per unit of risk. Keda Clean Energy is currently generating about -0.05 per unit of risk. If you would invest  490.00  in PetroChina Co Ltd on October 3, 2024 and sell it today you would earn a total of  404.00  from holding PetroChina Co Ltd or generate 82.45% 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.  Keda Clean Energy

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.

Keda Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keda Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PetroChina and Keda Clean

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

The idea behind PetroChina Co Ltd and Keda Clean Energy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.