Correlation Between BOSTON BEER and PetroChina Company

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

By analyzing existing cross correlation between BOSTON BEER A and PetroChina Company Limited, you can compare the effects of market volatilities on BOSTON BEER and PetroChina Company 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 BOSTON BEER with a short position of PetroChina Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and PetroChina Company.

Diversification Opportunities for BOSTON BEER and PetroChina Company

-0.72

Correlation Coefficient

BOSTON BEER  PetroChina Company

Pay attention - limited upside

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

Pair Corralation between BOSTON BEER and PetroChina Company

Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the PetroChina Company. But the stock apears to be less risky and, when comparing its historical volatility, BOSTON BEER A is 1.01 times less risky than PetroChina Company. The stock trades about -0.12 of its potential returns per unit of risk. The PetroChina Company Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  71.00  in PetroChina Company Limited on October 25, 2024 and sell it today you would earn a total of  4.00  from holding PetroChina Company Limited or generate 5.63% return on investment over 90 days.

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

BOSTON BEER A   vs.  PetroChina Company Limited

BOSTON BEER A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BOSTON BEER A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

PetroChina Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Company Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, PetroChina Company may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BOSTON BEER and PetroChina Company

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

The idea behind BOSTON BEER A and PetroChina Company Limited 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..