Correlation Between CNOOC and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both CNOOC and Occidental Petroleum 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 CNOOC and Occidental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNOOC and Occidental Petroleum, you can compare the effects of market volatilities on CNOOC and Occidental Petroleum 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 CNOOC with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNOOC and Occidental Petroleum.
Diversification Opportunities for CNOOC and Occidental Petroleum
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CNOOC and Occidental is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CNOOC and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and CNOOC 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 CNOOC are associated (or correlated) with Occidental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Occidental Petroleum has no effect on the direction of CNOOC i.e., CNOOC and Occidental Petroleum go up and down completely randomly.
Pair Corralation between CNOOC and Occidental Petroleum
Assuming the 90 days trading horizon CNOOC is expected to generate 2.1 times less return on investment than Occidental Petroleum. But when comparing it to its historical volatility, CNOOC is 1.1 times less risky than Occidental Petroleum. It trades about 0.02 of its potential returns per unit of risk. Occidental Petroleum is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,471 in Occidental Petroleum on September 26, 2024 and sell it today you would earn a total of 120.00 from holding Occidental Petroleum or generate 2.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CNOOC vs. Occidental Petroleum
Performance |
Timeline |
CNOOC |
Occidental Petroleum |
CNOOC and Occidental Petroleum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CNOOC and Occidental Petroleum
The main advantage of trading using opposite CNOOC and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNOOC position performs unexpectedly, Occidental Petroleum 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 Occidental Petroleum will offset losses from the drop in Occidental Petroleum's long position.CNOOC vs. Alibaba Group Holding | CNOOC vs. ConocoPhillips | CNOOC vs. Canadian Natural Resources | CNOOC vs. Occidental Petroleum |
Occidental Petroleum vs. Alibaba Group Holding | Occidental Petroleum vs. ConocoPhillips | Occidental Petroleum vs. CNOOC | Occidental Petroleum vs. Canadian Natural Resources |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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