Correlation Between Offshore Oil and Citic Offshore

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

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

Diversification Opportunities for Offshore Oil and Citic Offshore

0.07

Correlation Coefficient

Offshore Oil  Citic Offshore

Significant diversification

The 3 months correlation between Offshore and Citic is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Offshore Oil Engineering and Citic Offshore Helicopter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Offshore Helicopter and Offshore Oil 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 Offshore Oil Engineering are associated (or correlated) with Citic Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Offshore Helicopter has no effect on the direction of Offshore Oil i.e., Offshore Oil and Citic Offshore go up and down completely randomly.

Pair Corralation between Offshore Oil and Citic Offshore

Assuming the 90 days trading horizon Offshore Oil Engineering is expected to under-perform the Citic Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Offshore Oil Engineering is 1.7 times less risky than Citic Offshore. The stock trades about 0.0 of its potential returns per unit of risk. The Citic Offshore Helicopter is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  724.00  in Citic Offshore Helicopter on October 5, 2024 and sell it today you would earn a total of  1,719  from holding Citic Offshore Helicopter or generate 237.43% return on investment over 90 days.

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

Offshore Oil Engineering  vs.  Citic Offshore Helicopter

Offshore Oil Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Offshore Oil Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Citic Offshore Helicopter

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Offshore Helicopter are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Citic Offshore sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Offshore Oil and Citic Offshore

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

The idea behind Offshore Oil Engineering and Citic Offshore Helicopter 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.