Correlation Between DFS Furniture and PetroChina Company

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

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

Diversification Opportunities for DFS Furniture and PetroChina Company

0.42

Correlation Coefficient

DFS Furniture  PetroChina Company

Very weak diversification

The 3 months correlation between DFS and PetroChina is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and PetroChina Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina Limited and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with PetroChina Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroChina Limited has no effect on the direction of DFS Furniture i.e., DFS Furniture and PetroChina Company go up and down completely randomly.

Pair Corralation between DFS Furniture and PetroChina Company

Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 0.91 times more return on investment than PetroChina Company. However, DFS Furniture PLC is 1.1 times less risky than PetroChina Company. It trades about 0.22 of its potential returns per unit of risk. PetroChina Company Limited is currently generating about 0.19 per unit of risk. If you would invest  150.00  in DFS Furniture PLC on April 24, 2025 and sell it today you would earn a total of  47.00  from holding DFS Furniture PLC or generate 31.33% return on investment over 90 days.

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

DFS Furniture PLC  vs.  PetroChina Company Limited

DFS Furniture PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DFS Furniture PLC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, DFS Furniture unveiled solid returns over the last few months and may actually be approaching a breakup point.

PetroChina Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PetroChina Company Limited are ranked lower than 14 (%) 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.

Pair Trading with DFS Furniture and PetroChina Company

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

The idea behind DFS Furniture PLC and PetroChina Company Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.