Correlation Between China Oilfield and Fiserv

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

By analyzing existing cross correlation between China Oilfield Services and Fiserv Inc, you can compare the effects of market volatilities on China Oilfield and Fiserv 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 Oilfield with a short position of Fiserv. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Oilfield and Fiserv.

Diversification Opportunities for China Oilfield and Fiserv

0.38

Correlation Coefficient

China Oilfield  Fiserv

Weak diversification

The 3 months correlation between China and Fiserv is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding China Oilfield Services and Fiserv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiserv Inc and China 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 China Oilfield Services are associated (or correlated) with Fiserv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiserv Inc has no effect on the direction of China Oilfield i.e., China Oilfield and Fiserv go up and down completely randomly.

Pair Corralation between China Oilfield and Fiserv

Assuming the 90 days horizon China Oilfield Services is expected to generate 2.68 times more return on investment than Fiserv. However, China Oilfield is 2.68 times more volatile than Fiserv Inc. It trades about 0.08 of its potential returns per unit of risk. Fiserv Inc is currently generating about 0.06 per unit of risk. If you would invest  89.00  in China Oilfield Services on February 15, 2024 and sell it today you would earn a total of  11.00  from holding China Oilfield Services or generate 12.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

China Oilfield Services  vs.  Fiserv Inc

China Oilfield Services

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Oilfield Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, China Oilfield reported solid returns over the last few months and may actually be approaching a breakup point.

Fiserv Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fiserv Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Fiserv is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with China Oilfield and Fiserv

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

The idea behind China Oilfield Services and Fiserv Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.