Correlation Between PetroChina and OMV Aktiengesellscha

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

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

Diversification Opportunities for PetroChina and OMV Aktiengesellscha

0.73

Correlation Coefficient

PetroChina  OMV Aktiengesellscha

Poor diversification

The 3 months correlation between PetroChina and OMV is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding PetroChina Co Ltd and OMV Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMV Aktiengesellschaft and PetroChina 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 Co Ltd are associated (or correlated) with OMV Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMV Aktiengesellschaft has no effect on the direction of PetroChina i.e., PetroChina and OMV Aktiengesellscha go up and down completely randomly.

Pair Corralation between PetroChina and OMV Aktiengesellscha

Assuming the 90 days horizon PetroChina Co Ltd is expected to generate 4.28 times more return on investment than OMV Aktiengesellscha. However, PetroChina is 4.28 times more volatile than OMV Aktiengesellschaft. It trades about 0.02 of its potential returns per unit of risk. OMV Aktiengesellschaft is currently generating about -0.02 per unit of risk. If you would invest  74.00  in PetroChina Co Ltd on September 17, 2024 and sell it today you would earn a total of  0.00  from holding PetroChina Co Ltd or generate 0.0% return on investment over 90 days.

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

PetroChina Co Ltd  vs.  OMV Aktiengesellschaft

PetroChina

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Co Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PetroChina is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

OMV Aktiengesellschaft

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PetroChina and OMV Aktiengesellscha

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

The idea behind PetroChina Co Ltd and OMV Aktiengesellschaft 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.