Correlation Between China Merchants and CNOOC
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By analyzing existing cross correlation between China Merchants Bank and CNOOC Limited, you can compare the effects of market volatilities on China Merchants and CNOOC 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 China Merchants with a short position of CNOOC. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and CNOOC.
Diversification Opportunities for China Merchants and CNOOC
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and CNOOC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank and CNOOC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC Limited and China Merchants 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 China Merchants Bank are associated (or correlated) with CNOOC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNOOC Limited has no effect on the direction of China Merchants i.e., China Merchants and CNOOC go up and down completely randomly.
Pair Corralation between China Merchants and CNOOC
Assuming the 90 days trading horizon China Merchants Bank is expected to under-perform the CNOOC. In addition to that, China Merchants is 1.04 times more volatile than CNOOC Limited. It trades about -0.21 of its total potential returns per unit of risk. CNOOC Limited is currently generating about -0.11 per unit of volatility. If you would invest 2,739 in CNOOC Limited on August 28, 2024 and sell it today you would lose (89.00) from holding CNOOC Limited or give up 3.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Merchants Bank vs. CNOOC Limited
Performance |
| Timeline |
| China Merchants Bank |
| CNOOC Limited |
China Merchants and CNOOC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and CNOOC
The main advantage of trading using opposite China Merchants and CNOOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants position performs unexpectedly, CNOOC 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 CNOOC will offset losses from the drop in CNOOC's long position.| China Merchants vs. Oppein Home Group | China Merchants vs. Xiamen Goldenhome Co | China Merchants vs. Hubei Geoway Investment | China Merchants vs. Harbin Hatou Investment |
| CNOOC vs. Unisplendour Corp | CNOOC vs. CGN Nuclear Technology | CNOOC vs. HanS Laser Tech | CNOOC vs. Jiujiang Shanshui Technology |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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