Correlation Between PetroChina and Amlogic Shanghai

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

Diversification Opportunities for PetroChina and Amlogic Shanghai

0.15

Correlation Coefficient

PetroChina  Amlogic Shanghai

Average diversification

The 3 months correlation between PetroChina and Amlogic is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Amlogic Shanghai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amlogic Shanghai 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 Amlogic Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amlogic Shanghai has no effect on the direction of PetroChina i.e., PetroChina and Amlogic Shanghai go up and down completely randomly.

Pair Corralation between PetroChina and Amlogic Shanghai

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to generate 0.36 times more return on investment than Amlogic Shanghai. However, PetroChina Co Ltd is 2.75 times less risky than Amlogic Shanghai. It trades about 0.06 of its potential returns per unit of risk. Amlogic Shanghai Co is currently generating about -0.09 per unit of risk. If you would invest  845.00  in PetroChina Co Ltd on October 9, 2024 and sell it today you would earn a total of  39.00  from holding PetroChina Co Ltd or generate 4.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

PetroChina Co Ltd  vs.  Amlogic Shanghai Co

PetroChina

Risk-Adjusted Performance

4 of 100

Modest

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.

Amlogic Shanghai

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amlogic Shanghai Co 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 Amlogic Shanghai

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

The idea behind PetroChina Co Ltd and Amlogic Shanghai Co 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..