Correlation Between BP Plc and China Petroleum
Can any of the company-specific risk be diversified away by investing in both BP Plc and China Petroleum 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 BP Plc and China Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP plc and China Petroleum Chemical, you can compare the effects of market volatilities on BP Plc and China Petroleum 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 BP Plc with a short position of China Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Plc and China Petroleum.
Diversification Opportunities for BP Plc and China Petroleum
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BPAQF and China is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BP plc and China Petroleum Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petroleum Chemical and BP Plc 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 BP plc are associated (or correlated) with China Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petroleum Chemical has no effect on the direction of BP Plc i.e., BP Plc and China Petroleum go up and down completely randomly.
Pair Corralation between BP Plc and China Petroleum
Assuming the 90 days horizon BP plc is expected to under-perform the China Petroleum. But the pink sheet apears to be less risky and, when comparing its historical volatility, BP plc is 1.82 times less risky than China Petroleum. The pink sheet trades about -0.02 of its potential returns per unit of risk. The China Petroleum Chemical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 58.00 in China Petroleum Chemical on September 15, 2024 and sell it today you would earn a total of 0.00 from holding China Petroleum Chemical or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.46% |
Values | Daily Returns |
BP plc vs. China Petroleum Chemical
Performance |
Timeline |
BP plc |
China Petroleum Chemical |
BP Plc and China Petroleum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BP Plc and China Petroleum
The main advantage of trading using opposite BP Plc and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Plc position performs unexpectedly, China Petroleum 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 China Petroleum will offset losses from the drop in China Petroleum's long position.BP Plc vs. Unit Corporation | BP Plc vs. Galp Energa | BP Plc vs. Ecopetrol SA ADR | BP Plc vs. Equinor ASA ADR |
China Petroleum vs. Equinor ASA ADR | China Petroleum vs. TotalEnergies SE ADR | China Petroleum vs. Ecopetrol SA ADR | China Petroleum vs. National Fuel Gas |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Stocks Directory Find actively traded stocks across global markets | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |