Correlation Between CHINA OIL and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both CHINA OIL and BRIT AMER 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 OIL and BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA OIL AND and BRIT AMER TOBACCO, you can compare the effects of market volatilities on CHINA OIL and BRIT AMER 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 OIL with a short position of BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA OIL and BRIT AMER.
Diversification Opportunities for CHINA OIL and BRIT AMER
Average diversification
The 3 months correlation between CHINA and BRIT is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding CHINA OIL AND and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO and CHINA OIL 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 OIL AND are associated (or correlated) with BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of CHINA OIL i.e., CHINA OIL and BRIT AMER go up and down completely randomly.
Pair Corralation between CHINA OIL and BRIT AMER
Assuming the 90 days trading horizon CHINA OIL AND is expected to under-perform the BRIT AMER. In addition to that, CHINA OIL is 2.13 times more volatile than BRIT AMER TOBACCO. It trades about -0.03 of its total potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.05 per unit of volatility. If you would invest 2,958 in BRIT AMER TOBACCO on November 30, 2024 and sell it today you would earn a total of 789.00 from holding BRIT AMER TOBACCO or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA OIL AND vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| CHINA OIL AND |
| BRIT AMER TOBACCO |
CHINA OIL and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA OIL and BRIT AMER
The main advantage of trading using opposite CHINA OIL and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA OIL position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| CHINA OIL vs. NAGOYA RAILROAD | CHINA OIL vs. Yunnan Water Investment | CHINA OIL vs. COPLAND ROAD CAPITAL | CHINA OIL vs. MidCap Financial Investment |
| BRIT AMER vs. Globex Mining Enterprises | BRIT AMER vs. Eurasia Mining Plc | BRIT AMER vs. MAG Silver Corp | BRIT AMER vs. Pebblebrook Hotel Trust |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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