Correlation Between CICT Mobile and PetroChina

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

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

Diversification Opportunities for CICT Mobile and PetroChina

-0.64

Correlation Coefficient

CICT Mobile  PetroChina

Excellent diversification

The 3 months correlation between CICT and PetroChina is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding CICT Mobile Communication and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and CICT Mobile 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 CICT Mobile Communication 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 CICT Mobile i.e., CICT Mobile and PetroChina go up and down completely randomly.

Pair Corralation between CICT Mobile and PetroChina

Assuming the 90 days trading horizon CICT Mobile Communication is expected to under-perform the PetroChina. In addition to that, CICT Mobile is 1.67 times more volatile than PetroChina Co Ltd. It trades about -0.07 of its total potential returns per unit of risk. PetroChina Co Ltd is currently generating about 0.0 per unit of volatility. If you would invest  848.00  in PetroChina Co Ltd on October 23, 2024 and sell it today you would lose (3.00) from holding PetroChina Co Ltd or give up 0.35% of portfolio value over 90 days.

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

CICT Mobile Communication  vs.  PetroChina Co Ltd

CICT Mobile Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CICT Mobile Communication 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.

PetroChina

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days PetroChina Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. 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 CICT Mobile and PetroChina

The main advantage of trading using opposite CICT Mobile and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CICT Mobile 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 CICT Mobile Communication 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.