Correlation Between CHINA OIL and PRECISION DRILLING

Can any of the company-specific risk be diversified away by investing in both CHINA OIL and PRECISION 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 CHINA OIL and PRECISION DRILLING 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 PRECISION DRILLING P, you can compare the effects of market volatilities on CHINA OIL and PRECISION 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 CHINA OIL with a short position of PRECISION DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA OIL and PRECISION DRILLING.

Diversification Opportunities for CHINA OIL and PRECISION DRILLING

0.0

Correlation Coefficient

CHINA OIL  PRECISION DRILLING

Pay attention - limited upside

The 3 months correlation between CHINA and PRECISION is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA OIL AND and PRECISION DRILLING P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRECISION DRILLING 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 PRECISION DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRECISION DRILLING has no effect on the direction of CHINA OIL i.e., CHINA OIL and PRECISION DRILLING go up and down completely randomly.

Pair Corralation between CHINA OIL and PRECISION DRILLING

If you would invest  0.00  in CHINA OIL AND on September 3, 2024 and sell it today you would earn a total of  0.00  from holding CHINA OIL AND or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

CHINA OIL AND  vs.  PRECISION DRILLING P

CHINA OIL AND

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days CHINA OIL AND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CHINA OIL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

PRECISION DRILLING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PRECISION DRILLING P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CHINA OIL and PRECISION DRILLING

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

The idea behind CHINA OIL AND and PRECISION DRILLING P 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.