Correlation Between PetroChina and Foxconn Industrial

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

Diversification Opportunities for PetroChina and Foxconn Industrial

-0.61

Correlation Coefficient

PetroChina  Foxconn Industrial

Excellent diversification

The 3 months correlation between PetroChina and Foxconn is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Foxconn Industrial Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxconn Industrial 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 Foxconn Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxconn Industrial has no effect on the direction of PetroChina i.e., PetroChina and Foxconn Industrial go up and down completely randomly.

Pair Corralation between PetroChina and Foxconn Industrial

If you would invest  0.00  in Foxconn Industrial Internet on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Foxconn Industrial Internet or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

PetroChina Co Ltd  vs.  Foxconn Industrial Internet

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.

Foxconn Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foxconn Industrial Internet 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 Foxconn Industrial

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

The idea behind PetroChina Co Ltd and Foxconn Industrial Internet 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.