Correlation Between PetroChina Company and PTT Public

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

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

Diversification Opportunities for PetroChina Company and PTT Public

0.55

Correlation Coefficient

PetroChina Company  PTT Public

Very weak diversification

The 3 months correlation between PetroChina and PTT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Company Limited and PTT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTT Public and PetroChina Company 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 Company Limited are associated (or correlated) with PTT Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTT Public has no effect on the direction of PetroChina Company i.e., PetroChina Company and PTT Public go up and down completely randomly.

Pair Corralation between PetroChina Company and PTT Public

Assuming the 90 days horizon PetroChina Company Limited is expected to generate 1.37 times more return on investment than PTT Public. However, PetroChina Company is 1.37 times more volatile than PTT Public. It trades about 0.24 of its potential returns per unit of risk. PTT Public is currently generating about 0.01 per unit of risk. If you would invest  67.00  in PetroChina Company Limited on September 29, 2024 and sell it today you would earn a total of  6.00  from holding PetroChina Company Limited or generate 8.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

PetroChina Company Limited  vs.  PTT Public

PetroChina Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetroChina Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PetroChina Company is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

PTT Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTT Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PTT Public is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PetroChina Company and PTT Public

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

The idea behind PetroChina Company Limited and PTT Public 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.