Correlation Between Sinopec Oilfield and BORR DRILLING
Can any of the company-specific risk be diversified away by investing in both Sinopec Oilfield and BORR DRILLING 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 Sinopec Oilfield and BORR DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinopec Oilfield Service and BORR DRILLING NEW, you can compare the effects of market volatilities on Sinopec Oilfield and BORR DRILLING 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 Sinopec Oilfield with a short position of BORR DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Oilfield and BORR DRILLING.
Diversification Opportunities for Sinopec Oilfield and BORR DRILLING
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sinopec and BORR is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Oilfield Service and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW and Sinopec Oilfield 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 Sinopec Oilfield Service are associated (or correlated) with BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of Sinopec Oilfield i.e., Sinopec Oilfield and BORR DRILLING go up and down completely randomly.
Pair Corralation between Sinopec Oilfield and BORR DRILLING
Assuming the 90 days trading horizon Sinopec Oilfield Service is expected to generate 2.3 times more return on investment than BORR DRILLING. However, Sinopec Oilfield is 2.3 times more volatile than BORR DRILLING NEW. It trades about 0.04 of its potential returns per unit of risk. BORR DRILLING NEW is currently generating about -0.03 per unit of risk. If you would invest 5.80 in Sinopec Oilfield Service on August 31, 2024 and sell it today you would earn a total of 0.90 from holding Sinopec Oilfield Service or generate 15.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopec Oilfield Service vs. BORR DRILLING NEW
Performance |
| Timeline |
| Sinopec Oilfield Service |
| BORR DRILLING NEW |
Sinopec Oilfield and BORR DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Oilfield and BORR DRILLING
The main advantage of trading using opposite Sinopec Oilfield and BORR DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Oilfield position performs unexpectedly, BORR DRILLING 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 BORR DRILLING will offset losses from the drop in BORR DRILLING's long position.| Sinopec Oilfield vs. PRECISION DRILLING P | Sinopec Oilfield vs. SHELF DRILLING LTD | Sinopec Oilfield vs. Daldrup Shne Aktiengesellschaft | Sinopec Oilfield vs. Superior Plus Corp |
| BORR DRILLING vs. PRECISION DRILLING P | BORR DRILLING vs. SHELF DRILLING LTD | BORR DRILLING vs. Daldrup Shne Aktiengesellschaft | BORR DRILLING 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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