Correlation Between China Oilfield and Raise Production

Can any of the company-specific risk be diversified away by investing in both China Oilfield and Raise Production 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 Raise Production 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 Raise Production, you can compare the effects of market volatilities on China Oilfield and Raise Production 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 Raise Production. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Oilfield and Raise Production.

Diversification Opportunities for China Oilfield and Raise Production

0.0

Correlation Coefficient

China Oilfield  Raise Production

Pay attention - limited upside

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

Pair Corralation between China Oilfield and Raise Production

If you would invest  84.00  in China Oilfield Services on January 20, 2024 and sell it today you would earn a total of  16.00  from holding China Oilfield Services or generate 19.05% return on investment over 90 days.

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

China Oilfield Services  vs.  Raise Production

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.

Raise Production

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raise Production has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Raise Production is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with China Oilfield and Raise Production

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

The idea behind China Oilfield Services and Raise Production 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.