Correlation Between China Oilfield and Saipem SpA
Can any of the company-specific risk be diversified away by investing in both China Oilfield and Saipem SpA 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 China Oilfield and Saipem SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Oilfield Services and Saipem SpA, you can compare the effects of market volatilities on China Oilfield and Saipem SpA 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 Oilfield with a short position of Saipem SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Oilfield and Saipem SpA.
Diversification Opportunities for China Oilfield and Saipem SpA
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Saipem is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding China Oilfield Services and Saipem SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saipem SpA and China Oilfield 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 Oilfield Services are associated (or correlated) with Saipem SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saipem SpA has no effect on the direction of China Oilfield i.e., China Oilfield and Saipem SpA go up and down completely randomly.
Pair Corralation between China Oilfield and Saipem SpA
If you would invest 151.00 in Saipem SpA on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Saipem SpA or generate 69.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.4% |
| Values | Daily Returns |
China Oilfield Services vs. Saipem SpA
Performance |
| Timeline |
| China Oilfield Services |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Saipem SpA |
China Oilfield and Saipem SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Oilfield and Saipem SpA
The main advantage of trading using opposite China Oilfield and Saipem SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Oilfield position performs unexpectedly, Saipem SpA 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 Saipem SpA will offset losses from the drop in Saipem SpA's long position.The idea behind China Oilfield Services and Saipem SpA 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.| Saipem SpA vs. Worley Parsons | Saipem SpA vs. Petrofac Ltd ADR | Saipem SpA vs. SMG Industries | Saipem SpA vs. NXT Energy Solutions |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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