Correlation Between OMV AG and PetroChina

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

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

Diversification Opportunities for OMV AG and PetroChina

0.83

Correlation Coefficient

OMV AG  PetroChina

Very poor diversification

The 3 months correlation between OMV and PetroChina is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding OMV AG PK and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and OMV AG 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 OMV AG PK 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 OMV AG i.e., OMV AG and PetroChina go up and down completely randomly.

Pair Corralation between OMV AG and PetroChina

Assuming the 90 days horizon OMV AG PK is expected to under-perform the PetroChina. But the pink sheet apears to be less risky and, when comparing its historical volatility, OMV AG PK is 3.45 times less risky than PetroChina. The pink sheet trades about -0.03 of its potential returns per unit of risk. The PetroChina Co Ltd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  70.00  in PetroChina Co Ltd on September 16, 2024 and sell it today you would earn a total of  4.00  from holding PetroChina Co Ltd or generate 5.71% return on investment over 90 days.

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

OMV AG PK  vs.  PetroChina Co Ltd

OMV AG PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OMV AG PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, OMV AG is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

PetroChina

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Co Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PetroChina may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with OMV AG and PetroChina

The main advantage of trading using opposite OMV AG and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OMV AG 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 OMV AG PK 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.