Correlation Between China Oilfield and Halliburton
Can any of the company-specific risk be diversified away by investing in both China Oilfield and Halliburton 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 Halliburton 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 Halliburton, you can compare the effects of market volatilities on China Oilfield and Halliburton 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 Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Oilfield and Halliburton.
Diversification Opportunities for China Oilfield and Halliburton
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Halliburton is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding China Oilfield Services and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of China Oilfield i.e., China Oilfield and Halliburton go up and down completely randomly.
Pair Corralation between China Oilfield and Halliburton
Assuming the 90 days horizon China Oilfield Services is expected to under-perform the Halliburton. But the stock apears to be less risky and, when comparing its historical volatility, China Oilfield Services is 1.57 times less risky than Halliburton. The stock trades about -0.11 of its potential returns per unit of risk. The Halliburton is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,580 in Halliburton on August 25, 2024 and sell it today you would earn a total of 492.00 from holding Halliburton or generate 19.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Oilfield Services vs. Halliburton
Performance |
| Timeline |
| China Oilfield Services |
| Halliburton |
China Oilfield and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Oilfield and Halliburton
The main advantage of trading using opposite China Oilfield and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Oilfield position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.| China Oilfield vs. Canadian Utilities Limited | China Oilfield vs. Stewart Information Services | China Oilfield vs. Entravision Communications | China Oilfield vs. Gamma Communications plc |
| Halliburton vs. Ryanair Holdings plc | Halliburton vs. SERI INDUSTRIAL EO | Halliburton vs. GRIFFIN MINING LTD | Halliburton vs. Zijin Mining 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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