Correlation Between PetroChina and Sunny Loan

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

Diversification Opportunities for PetroChina and Sunny Loan

0.19

Correlation Coefficient

PetroChina  Sunny Loan

Average diversification

The 3 months correlation between PetroChina and Sunny is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Sunny Loan Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Loan Top 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 Sunny Loan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Loan Top has no effect on the direction of PetroChina i.e., PetroChina and Sunny Loan go up and down completely randomly.

Pair Corralation between PetroChina and Sunny Loan

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to generate 0.41 times more return on investment than Sunny Loan. However, PetroChina Co Ltd is 2.42 times less risky than Sunny Loan. It trades about -0.14 of its potential returns per unit of risk. Sunny Loan Top is currently generating about -0.13 per unit of risk. If you would invest  900.00  in PetroChina Co Ltd on December 28, 2024 and sell it today you would lose (82.00) from holding PetroChina Co Ltd or give up 9.11% of portfolio value over 90 days.

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

PetroChina Co Ltd  vs.  Sunny Loan Top

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.

Sunny Loan Top

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunny Loan Top 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PetroChina and Sunny Loan

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

The idea behind PetroChina Co Ltd and Sunny Loan Top 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.