Correlation Between PetroChina and Fujian Anjoy

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

Diversification Opportunities for PetroChina and Fujian Anjoy

-0.65

Correlation Coefficient

PetroChina  Fujian Anjoy

Excellent diversification

The 3 months correlation between PetroChina and Fujian is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Fujian Anjoy Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Anjoy Foods 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 Fujian Anjoy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Anjoy Foods has no effect on the direction of PetroChina i.e., PetroChina and Fujian Anjoy go up and down completely randomly.

Pair Corralation between PetroChina and Fujian Anjoy

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to generate 0.56 times more return on investment than Fujian Anjoy. However, PetroChina Co Ltd is 1.78 times less risky than Fujian Anjoy. It trades about 0.06 of its potential returns per unit of risk. Fujian Anjoy Foods is currently generating about -0.06 per unit of risk. If you would invest  846.00  in PetroChina Co Ltd on October 21, 2024 and sell it today you would earn a total of  37.00  from holding PetroChina Co Ltd or generate 4.37% return on investment over 90 days.

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

PetroChina Co Ltd  vs.  Fujian Anjoy Foods

PetroChina

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Co Ltd are ranked lower than 4 (%) 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.

Fujian Anjoy Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fujian Anjoy Foods 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 Fujian Anjoy

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

The idea behind PetroChina Co Ltd and Fujian Anjoy Foods 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.