Correlation Between China Union and CNOOC
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By analyzing existing cross correlation between China Union Holdings and CNOOC Limited, you can compare the effects of market volatilities on China Union 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 China Union with a short position of CNOOC. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Union and CNOOC.
Diversification Opportunities for China Union and CNOOC
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and CNOOC is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding China Union Holdings and CNOOC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC Limited and China Union 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 Union Holdings 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 China Union i.e., China Union and CNOOC go up and down completely randomly.
Pair Corralation between China Union and CNOOC
Assuming the 90 days trading horizon China Union Holdings is expected to under-perform the CNOOC. In addition to that, China Union is 2.0 times more volatile than CNOOC Limited. It trades about -0.44 of its total potential returns per unit of risk. CNOOC Limited is currently generating about 0.14 per unit of volatility. If you would invest 2,650 in CNOOC Limited on September 24, 2024 and sell it today you would earn a total of 90.00 from holding CNOOC Limited or generate 3.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
China Union Holdings vs. CNOOC Limited
Performance |
Timeline |
China Union Holdings |
CNOOC Limited |
China Union and CNOOC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Union and CNOOC
The main advantage of trading using opposite China Union and CNOOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Union 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.China Union vs. PetroChina Co Ltd | China Union vs. China Mobile Limited | China Union vs. CNOOC Limited | China Union vs. Ping An Insurance |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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