Correlation Between DAX Index and China Oilfield
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By analyzing existing cross correlation between DAX Index and China Oilfield Services, you can compare the effects of market volatilities on DAX Index and China Oilfield 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 DAX Index with a short position of China Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and China Oilfield.
Diversification Opportunities for DAX Index and China Oilfield
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DAX and China is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and China Oilfield Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Oilfield Services and DAX Index 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 DAX Index are associated (or correlated) with China Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Oilfield Services has no effect on the direction of DAX Index i.e., DAX Index and China Oilfield go up and down completely randomly.
Pair Corralation between DAX Index and China Oilfield
Assuming the 90 days trading horizon DAX Index is expected to generate 1.55 times less return on investment than China Oilfield. But when comparing it to its historical volatility, DAX Index is 4.11 times less risky than China Oilfield. It trades about 0.08 of its potential returns per unit of risk. China Oilfield Services is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 69.00 in China Oilfield Services on August 25, 2024 and sell it today you would earn a total of 16.00 from holding China Oilfield Services or generate 23.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
DAX Index vs. China Oilfield Services
Performance |
| Timeline |
DAX Index and China Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
China Oilfield Services
Pair trading matchups for China Oilfield
Pair Trading with DAX Index and China Oilfield
The main advantage of trading using opposite DAX Index and China Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, China Oilfield 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 Oilfield will offset losses from the drop in China Oilfield's long position.| DAX Index vs. Granite Construction | DAX Index vs. AGRICULTBK HADR25 YC | DAX Index vs. ADRIATIC METALS LS 013355 | DAX Index vs. GREENX METALS LTD |
| China Oilfield vs. Canadian Utilities Limited | China Oilfield vs. Stewart Information Services | China Oilfield vs. Entravision Communications | China Oilfield vs. Gamma Communications plc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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