Correlation Between Cabio Biotech and CNOOC
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By analyzing existing cross correlation between Cabio Biotech Wuhan and CNOOC Limited, you can compare the effects of market volatilities on Cabio Biotech 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 Cabio Biotech with a short position of CNOOC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabio Biotech and CNOOC.
Diversification Opportunities for Cabio Biotech and CNOOC
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cabio and CNOOC is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cabio Biotech Wuhan and CNOOC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC Limited and Cabio Biotech 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 Cabio Biotech Wuhan 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 Cabio Biotech i.e., Cabio Biotech and CNOOC go up and down completely randomly.
Pair Corralation between Cabio Biotech and CNOOC
Assuming the 90 days trading horizon Cabio Biotech Wuhan is expected to generate 1.51 times more return on investment than CNOOC. However, Cabio Biotech is 1.51 times more volatile than CNOOC Limited. It trades about 0.29 of its potential returns per unit of risk. CNOOC Limited is currently generating about -0.16 per unit of risk. If you would invest 1,809 in Cabio Biotech Wuhan on November 7, 2024 and sell it today you would earn a total of 196.00 from holding Cabio Biotech Wuhan or generate 10.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cabio Biotech Wuhan vs. CNOOC Limited
Performance |
| Timeline |
| Cabio Biotech Wuhan |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CNOOC Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Cabio Biotech and CNOOC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cabio Biotech and CNOOC
The main advantage of trading using opposite Cabio Biotech and CNOOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabio Biotech 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 Cabio Biotech Wuhan 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.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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