Correlation Between Offshore Oil and G Bits

Can any of the company-specific risk be diversified away by investing in both Offshore Oil and G Bits 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 G Bits 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 G bits Network Technology, you can compare the effects of market volatilities on Offshore Oil and G Bits 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 G Bits. Check out your portfolio center. Please also check ongoing floating volatility patterns of Offshore Oil and G Bits.

Diversification Opportunities for Offshore Oil and G Bits

0.49

Correlation Coefficient

Offshore Oil  G Bits

Very weak diversification

The 3 months correlation between Offshore and 603444 is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Offshore Oil Engineering and G bits Network Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G bits Network 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 G Bits. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G bits Network has no effect on the direction of Offshore Oil i.e., Offshore Oil and G Bits go up and down completely randomly.

Pair Corralation between Offshore Oil and G Bits

Assuming the 90 days trading horizon Offshore Oil is expected to generate 2.89 times less return on investment than G Bits. But when comparing it to its historical volatility, Offshore Oil Engineering is 1.32 times less risky than G Bits. It trades about 0.03 of its potential returns per unit of risk. G bits Network Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  17,060  in G bits Network Technology on October 2, 2024 and sell it today you would earn a total of  5,650  from holding G bits Network Technology or generate 33.12% return on investment over 90 days.

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

Offshore Oil Engineering  vs.  G bits Network Technology

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.

G bits Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G bits Network Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Offshore Oil and G Bits

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

The idea behind Offshore Oil Engineering and G bits Network Technology 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.