Correlation Between Offshore Oil and Bank of China
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By analyzing existing cross correlation between Offshore Oil Engineering and Bank of China, you can compare the effects of market volatilities on Offshore Oil and Bank of China 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 Offshore Oil with a short position of Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Offshore Oil and Bank of China.
Diversification Opportunities for Offshore Oil and Bank of China
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Offshore and Bank is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Offshore Oil Engineering and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China and Offshore Oil 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 Offshore Oil Engineering are associated (or correlated) with Bank of China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of China has no effect on the direction of Offshore Oil i.e., Offshore Oil and Bank of China go up and down completely randomly.
Pair Corralation between Offshore Oil and Bank of China
Assuming the 90 days trading horizon Offshore Oil Engineering is expected to generate 0.96 times more return on investment than Bank of China. However, Offshore Oil Engineering is 1.05 times less risky than Bank of China. It trades about -0.08 of its potential returns per unit of risk. Bank of China is currently generating about -0.1 per unit of risk. If you would invest 542.00 in Offshore Oil Engineering on November 8, 2024 and sell it today you would lose (12.00) from holding Offshore Oil Engineering or give up 2.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Offshore Oil Engineering vs. Bank of China
Performance |
| Timeline |
| Offshore Oil Engineering |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bank of China |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Offshore Oil and Bank of China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Offshore Oil and Bank of China
The main advantage of trading using opposite Offshore Oil and Bank of China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Offshore Oil position performs unexpectedly, Bank of China 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 Bank of China will offset losses from the drop in Bank of China's long position.The idea behind Offshore Oil Engineering and Bank of China 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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