Correlation Between Minmetals Capital and CNOOC

Can any of the company-specific risk be diversified away by investing in both Minmetals Capital and CNOOC 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 Minmetals Capital and CNOOC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Minmetals Capital Co and CNOOC Limited, you can compare the effects of market volatilities on Minmetals Capital and CNOOC 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 Minmetals Capital with a short position of CNOOC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minmetals Capital and CNOOC.

Diversification Opportunities for Minmetals Capital and CNOOC

-0.03

Correlation Coefficient

Minmetals Capital  CNOOC

Good diversification

The 3 months correlation between Minmetals and CNOOC is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Minmetals Capital Co and CNOOC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC Limited and Minmetals Capital 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 Minmetals Capital Co are associated (or correlated) with CNOOC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNOOC Limited has no effect on the direction of Minmetals Capital i.e., Minmetals Capital and CNOOC go up and down completely randomly.

Pair Corralation between Minmetals Capital and CNOOC

Assuming the 90 days trading horizon Minmetals Capital Co is expected to under-perform the CNOOC. In addition to that, Minmetals Capital is 1.39 times more volatile than CNOOC Limited. It trades about -0.06 of its total potential returns per unit of risk. CNOOC Limited is currently generating about 0.37 per unit of volatility. If you would invest  2,612  in CNOOC Limited on September 27, 2024 and sell it today you would earn a total of  292.00  from holding CNOOC Limited or generate 11.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Minmetals Capital Co  vs.  CNOOC Limited

Minmetals Capital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Minmetals Capital Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Minmetals Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

CNOOC Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CNOOC Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CNOOC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Minmetals Capital and CNOOC

The main advantage of trading using opposite Minmetals Capital and CNOOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minmetals Capital position performs unexpectedly, CNOOC 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 CNOOC will offset losses from the drop in CNOOC's long position.

The idea behind Minmetals Capital Co and CNOOC Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.