Correlation Between PetroChina and Circuit Fabology

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

Diversification Opportunities for PetroChina and Circuit Fabology

-0.72

Correlation Coefficient

PetroChina  Circuit Fabology

Pay attention - limited upside

The 3 months correlation between PetroChina and Circuit is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and Circuit Fabology Microelectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Circuit Fabology Mic 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 Circuit Fabology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Circuit Fabology Mic has no effect on the direction of PetroChina i.e., PetroChina and Circuit Fabology go up and down completely randomly.

Pair Corralation between PetroChina and Circuit Fabology

Assuming the 90 days trading horizon PetroChina Co Ltd is expected to generate 0.7 times more return on investment than Circuit Fabology. However, PetroChina Co Ltd is 1.44 times less risky than Circuit Fabology. It trades about 0.0 of its potential returns per unit of risk. Circuit Fabology Microelectronics is currently generating about -0.14 per unit of risk. If you would invest  858.00  in PetroChina Co Ltd on October 23, 2024 and sell it today you would lose (1.00) from holding PetroChina Co Ltd or give up 0.12% of portfolio value over 90 days.

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

PetroChina Co Ltd  vs.  Circuit Fabology Microelectron

PetroChina

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Co Ltd are ranked lower than 1 (%) 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.

Circuit Fabology Mic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Circuit Fabology Microelectronics 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 Circuit Fabology

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

The idea behind PetroChina Co Ltd and Circuit Fabology Microelectronics 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.