Correlation Between Bank of Communications and CNOOC
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By analyzing existing cross correlation between Bank of Communications and CNOOC Limited, you can compare the effects of market volatilities on Bank of Communications 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 Bank of Communications with a short position of CNOOC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Communications and CNOOC.
Diversification Opportunities for Bank of Communications and CNOOC
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and CNOOC is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Communications and CNOOC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC Limited and Bank of Communications 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 Bank of Communications 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 Bank of Communications i.e., Bank of Communications and CNOOC go up and down completely randomly.
Pair Corralation between Bank of Communications and CNOOC
Assuming the 90 days trading horizon Bank of Communications is expected to generate 0.72 times more return on investment than CNOOC. However, Bank of Communications is 1.39 times less risky than CNOOC. It trades about -0.07 of its potential returns per unit of risk. CNOOC Limited is currently generating about -0.22 per unit of risk. If you would invest 733.00 in Bank of Communications on August 24, 2024 and sell it today you would lose (12.00) from holding Bank of Communications or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Communications vs. CNOOC Limited
Performance |
| Timeline |
| Bank of Communications |
| CNOOC Limited |
Bank of Communications and CNOOC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Communications and CNOOC
The main advantage of trading using opposite Bank of Communications and CNOOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Communications 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.The idea behind Bank of Communications and CNOOC 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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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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