Correlation Between PetroChina Company and FORMPIPE SOFTWARE

Can any of the company-specific risk be diversified away by investing in both PetroChina Company and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB, you can compare the effects of market volatilities on PetroChina Company and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroChina Company and FORMPIPE SOFTWARE.

Diversification Opportunities for PetroChina Company and FORMPIPE SOFTWARE

-0.02

Correlation Coefficient

PetroChina Company  FORMPIPE SOFTWARE

Good diversification

The 3 months correlation between PetroChina and FORMPIPE is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Company Limited and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of PetroChina Company i.e., PetroChina Company and FORMPIPE SOFTWARE go up and down completely randomly.

Pair Corralation between PetroChina Company and FORMPIPE SOFTWARE

Assuming the 90 days horizon PetroChina Company Limited is expected to generate 2.37 times more return on investment than FORMPIPE SOFTWARE. However, PetroChina Company is 2.37 times more volatile than FORMPIPE SOFTWARE AB. It trades about 0.09 of its potential returns per unit of risk. FORMPIPE SOFTWARE AB is currently generating about 0.05 per unit of risk. If you would invest  50.00  in PetroChina Company Limited on September 4, 2024 and sell it today you would earn a total of  16.00  from holding PetroChina Company Limited or generate 32.0% return on investment over 90 days.

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

PetroChina Company Limited  vs.  FORMPIPE SOFTWARE AB

PetroChina Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Company Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PetroChina Company reported solid returns over the last few months and may actually be approaching a breakup point.

FORMPIPE SOFTWARE

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with PetroChina Company and FORMPIPE SOFTWARE

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

The idea behind PetroChina Company Limited and FORMPIPE SOFTWARE AB 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.