Correlation Between Spirent Communications and CNOOC
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and CNOOC 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 Spirent Communications and CNOOC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and CNOOC, you can compare the effects of market volatilities on Spirent 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 Spirent Communications with a short position of CNOOC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and CNOOC.
Diversification Opportunities for Spirent Communications and CNOOC
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirent and CNOOC is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and CNOOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC and Spirent 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 Spirent Communications plc 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 has no effect on the direction of Spirent Communications i.e., Spirent Communications and CNOOC go up and down completely randomly.
Pair Corralation between Spirent Communications and CNOOC
Assuming the 90 days horizon Spirent Communications is expected to generate 158.85 times less return on investment than CNOOC. But when comparing it to its historical volatility, Spirent Communications plc is 1.38 times less risky than CNOOC. It trades about 0.0 of its potential returns per unit of risk. CNOOC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 19.00 in CNOOC on September 4, 2024 and sell it today you would earn a total of 199.00 from holding CNOOC or generate 1047.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. CNOOC
Performance |
| Timeline |
| Spirent Communications |
| CNOOC |
Spirent Communications and CNOOC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and CNOOC
The main advantage of trading using opposite Spirent Communications and CNOOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent 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.| Spirent Communications vs. BJs Restaurants | Spirent Communications vs. STMicroelectronics NV | Spirent Communications vs. Renesas Electronics | Spirent Communications vs. BYD ELECTRONIC |
| CNOOC vs. Alibaba Group Holding | CNOOC vs. Occidental Petroleum | CNOOC vs. WOODSIDE ENE SPADR | CNOOC vs. Woodside Energy Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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