Correlation Between Xinya Electronic and CNOOC

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

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

Diversification Opportunities for Xinya Electronic and CNOOC

0.24

Correlation Coefficient

Xinya Electronic  CNOOC

Modest diversification

The 3 months correlation between Xinya and CNOOC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Xinya Electronic Co and CNOOC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC Limited and Xinya Electronic 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 Xinya Electronic 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 Xinya Electronic i.e., Xinya Electronic and CNOOC go up and down completely randomly.

Pair Corralation between Xinya Electronic and CNOOC

Assuming the 90 days trading horizon Xinya Electronic Co is expected to generate 1.9 times more return on investment than CNOOC. However, Xinya Electronic is 1.9 times more volatile than CNOOC Limited. It trades about 0.34 of its potential returns per unit of risk. CNOOC Limited is currently generating about 0.14 per unit of risk. If you would invest  1,336  in Xinya Electronic Co on September 24, 2024 and sell it today you would earn a total of  214.00  from holding Xinya Electronic Co or generate 16.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Xinya Electronic Co  vs.  CNOOC Limited

Xinya Electronic

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xinya Electronic Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinya Electronic sustained solid returns over the last few months and may actually be approaching a breakup point.

CNOOC Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CNOOC Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CNOOC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xinya Electronic and CNOOC

The main advantage of trading using opposite Xinya Electronic and CNOOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinya Electronic 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 Xinya Electronic 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.