Correlation Between Guilin Seamild and Offshore Oil

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

By analyzing existing cross correlation between Guilin Seamild Foods and Offshore Oil Engineering, you can compare the effects of market volatilities on Guilin Seamild and Offshore Oil 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 Guilin Seamild with a short position of Offshore Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guilin Seamild and Offshore Oil.

Diversification Opportunities for Guilin Seamild and Offshore Oil

0.44

Correlation Coefficient

Guilin Seamild  Offshore Oil

Very weak diversification

The 3 months correlation between Guilin and Offshore is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Guilin Seamild Foods and Offshore Oil Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Offshore Oil Engineering and Guilin Seamild 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 Guilin Seamild Foods are associated (or correlated) with Offshore Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Offshore Oil Engineering has no effect on the direction of Guilin Seamild i.e., Guilin Seamild and Offshore Oil go up and down completely randomly.

Pair Corralation between Guilin Seamild and Offshore Oil

Assuming the 90 days trading horizon Guilin Seamild Foods is expected to under-perform the Offshore Oil. In addition to that, Guilin Seamild is 1.44 times more volatile than Offshore Oil Engineering. It trades about -0.01 of its total potential returns per unit of risk. Offshore Oil Engineering is currently generating about 0.12 per unit of volatility. If you would invest  546.00  in Offshore Oil Engineering on December 26, 2024 and sell it today you would earn a total of  64.00  from holding Offshore Oil Engineering or generate 11.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Guilin Seamild Foods  vs.  Offshore Oil Engineering

Guilin Seamild Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guilin Seamild Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guilin Seamild is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Offshore Oil Engineering

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Offshore Oil Engineering are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Offshore Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guilin Seamild and Offshore Oil

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

The idea behind Guilin Seamild Foods and Offshore Oil Engineering 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.