Correlation Between Beken Corp and PetroChina

Can any of the company-specific risk be diversified away by investing in both Beken Corp and PetroChina 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 Beken Corp and PetroChina into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beken Corp and PetroChina Co Ltd, you can compare the effects of market volatilities on Beken Corp and PetroChina 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 Beken Corp with a short position of PetroChina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beken Corp and PetroChina.

Diversification Opportunities for Beken Corp and PetroChina

0.1

Correlation Coefficient

Beken Corp  PetroChina

Average diversification

The 3 months correlation between Beken and PetroChina is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Beken Corp and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Beken Corp 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 Beken Corp are associated (or correlated) with PetroChina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroChina has no effect on the direction of Beken Corp i.e., Beken Corp and PetroChina go up and down completely randomly.

Pair Corralation between Beken Corp and PetroChina

Assuming the 90 days trading horizon Beken Corp is expected to generate 2.59 times more return on investment than PetroChina. However, Beken Corp is 2.59 times more volatile than PetroChina Co Ltd. It trades about 0.13 of its potential returns per unit of risk. PetroChina Co Ltd is currently generating about 0.28 per unit of risk. If you would invest  2,809  in Beken Corp on September 26, 2024 and sell it today you would earn a total of  286.00  from holding Beken Corp or generate 10.18% return on investment over 90 days.

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

Beken Corp  vs.  PetroChina Co Ltd

Beken Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beken Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beken Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

PetroChina

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Co Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PetroChina may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Beken Corp and PetroChina

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

The idea behind Beken Corp and PetroChina Co Ltd 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.