Correlation Between CHINA OIL and British American
Can any of the company-specific risk be diversified away by investing in both CHINA OIL and British American 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 British American 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 British American Tobacco, you can compare the effects of market volatilities on CHINA OIL and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA OIL and British American.
Diversification Opportunities for CHINA OIL and British American
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and British is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CHINA OIL AND and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of CHINA OIL i.e., CHINA OIL and British American go up and down completely randomly.
Pair Corralation between CHINA OIL and British American
Assuming the 90 days trading horizon CHINA OIL is expected to generate 6.68 times less return on investment than British American. But when comparing it to its historical volatility, CHINA OIL AND is 2.75 times less risky than British American. It trades about 0.08 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,675 in British American Tobacco on September 3, 2024 and sell it today you would earn a total of 920.00 from holding British American Tobacco or generate 34.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA OIL AND vs. British American Tobacco
Performance |
| Timeline |
| CHINA OIL AND |
| British American Tobacco |
CHINA OIL and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA OIL and British American
The main advantage of trading using opposite CHINA OIL and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA OIL position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| CHINA OIL vs. INSURANCE AUST GRP | CHINA OIL vs. SCANSOURCE | CHINA OIL vs. Japan Post Insurance | CHINA OIL vs. QBE Insurance Group |
| British American vs. British American Tobacco | British American vs. Japan Tobacco | British American vs. JAPAN TOBACCO UNSPADR12 | British American vs. Imperial Brands 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |