Correlation Between EOG Resources and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both EOG Resources and CHINA HUARONG 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 EOG Resources and CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on EOG Resources and CHINA HUARONG 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 EOG Resources with a short position of CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and CHINA HUARONG.
Diversification Opportunities for EOG Resources and CHINA HUARONG
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EOG and CHINA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD and EOG Resources 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 EOG Resources are associated (or correlated) with CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of EOG Resources i.e., EOG Resources and CHINA HUARONG go up and down completely randomly.
Pair Corralation between EOG Resources and CHINA HUARONG
Assuming the 90 days horizon EOG Resources is expected to generate 0.36 times more return on investment than CHINA HUARONG. However, EOG Resources is 2.75 times less risky than CHINA HUARONG. It trades about 0.37 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about -0.22 per unit of risk. If you would invest 11,266 in EOG Resources on August 27, 2024 and sell it today you would earn a total of 1,800 from holding EOG Resources or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EOG Resources vs. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| EOG Resources |
| CHINA HUARONG ENERHD |
EOG Resources and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and CHINA HUARONG
The main advantage of trading using opposite EOG Resources and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources position performs unexpectedly, CHINA HUARONG 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 CHINA HUARONG will offset losses from the drop in CHINA HUARONG's long position.| EOG Resources vs. Suntory Beverage Food | EOG Resources vs. Virtus Investment Partners | EOG Resources vs. Tsingtao Brewery | EOG Resources vs. PennyMac Mortgage Investment |
| CHINA HUARONG vs. EOG Resources | CHINA HUARONG vs. Canadian Natural Resources | CHINA HUARONG 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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