Correlation Between Offshore Oil and Thinkon Semiconductor

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

Diversification Opportunities for Offshore Oil and Thinkon Semiconductor

-0.13

Correlation Coefficient

Offshore Oil  Thinkon Semiconductor

Good diversification

The 3 months correlation between Offshore and Thinkon is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Offshore Oil Engineering and Thinkon Semiconductor Jinzhou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinkon Semiconductor 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 Thinkon Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinkon Semiconductor has no effect on the direction of Offshore Oil i.e., Offshore Oil and Thinkon Semiconductor go up and down completely randomly.

Pair Corralation between Offshore Oil and Thinkon Semiconductor

Assuming the 90 days trading horizon Offshore Oil Engineering is expected to generate 0.74 times more return on investment than Thinkon Semiconductor. However, Offshore Oil Engineering is 1.34 times less risky than Thinkon Semiconductor. It trades about 0.1 of its potential returns per unit of risk. Thinkon Semiconductor Jinzhou is currently generating about -0.02 per unit of risk. If you would invest  552.00  in Offshore Oil Engineering on December 27, 2024 and sell it today you would earn a total of  52.00  from holding Offshore Oil Engineering or generate 9.42% return on investment over 90 days.

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

Offshore Oil Engineering  vs.  Thinkon Semiconductor Jinzhou

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 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Offshore Oil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Thinkon Semiconductor

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Offshore Oil and Thinkon Semiconductor

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

The idea behind Offshore Oil Engineering and Thinkon Semiconductor Jinzhou 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.