Correlation Between CHINA OIL and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both CHINA OIL and FLOW TRADERS 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 FLOW TRADERS 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 FLOW TRADERS LTD, you can compare the effects of market volatilities on CHINA OIL and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA OIL and FLOW TRADERS.
Diversification Opportunities for CHINA OIL and FLOW TRADERS
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CHINA and FLOW is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding CHINA OIL AND and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of CHINA OIL i.e., CHINA OIL and FLOW TRADERS go up and down completely randomly.
Pair Corralation between CHINA OIL and FLOW TRADERS
Assuming the 90 days trading horizon CHINA OIL is expected to generate 2.05 times less return on investment than FLOW TRADERS. But when comparing it to its historical volatility, CHINA OIL AND is 5.81 times less risky than FLOW TRADERS. It trades about 0.08 of its potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,996 in FLOW TRADERS LTD on September 3, 2024 and sell it today you would earn a total of 116.00 from holding FLOW TRADERS LTD or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA OIL AND vs. FLOW TRADERS LTD
Performance |
| Timeline |
| CHINA OIL AND |
| FLOW TRADERS LTD |
CHINA OIL and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA OIL and FLOW TRADERS
The main advantage of trading using opposite CHINA OIL and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA OIL position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS'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 |
| FLOW TRADERS vs. Morgan Stanley | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. The Goldman Sachs | FLOW TRADERS vs. Superior Plus Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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