Correlation Between Quectel Wireless and PetroChina

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

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

Diversification Opportunities for Quectel Wireless and PetroChina

0.5

Correlation Coefficient

Quectel Wireless  PetroChina

Very weak diversification

The 3 months correlation between Quectel and PetroChina is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Quectel Wireless Solutions and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Quectel Wireless 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 Quectel Wireless Solutions 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 Quectel Wireless i.e., Quectel Wireless and PetroChina go up and down completely randomly.

Pair Corralation between Quectel Wireless and PetroChina

Assuming the 90 days trading horizon Quectel Wireless Solutions is expected to generate 3.5 times more return on investment than PetroChina. However, Quectel Wireless is 3.5 times more volatile than PetroChina Co Ltd. It trades about 0.23 of its potential returns per unit of risk. PetroChina Co Ltd is currently generating about 0.2 per unit of risk. If you would invest  5,395  in Quectel Wireless Solutions on October 9, 2024 and sell it today you would earn a total of  1,255  from holding Quectel Wireless Solutions or generate 23.26% return on investment over 90 days.

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

Quectel Wireless Solutions  vs.  PetroChina Co Ltd

Quectel Wireless Sol

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quectel Wireless Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Quectel Wireless sustained solid returns over the last few months and may actually be approaching a breakup point.

PetroChina

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Co Ltd are ranked lower than 5 (%) 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.

Pair Trading with Quectel Wireless and PetroChina

The main advantage of trading using opposite Quectel Wireless and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quectel Wireless 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 Quectel Wireless Solutions 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.