Correlation Between CNOOC and China Union

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both CNOOC and China Union 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 CNOOC and China Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNOOC Limited and China Union Holdings, you can compare the effects of market volatilities on CNOOC and China Union 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 CNOOC with a short position of China Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNOOC and China Union.

Diversification Opportunities for CNOOC and China Union

-0.87
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between CNOOC and China is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding CNOOC Limited and China Union Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Union Holdings and CNOOC 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 CNOOC Limited are associated (or correlated) with China Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Union Holdings has no effect on the direction of CNOOC i.e., CNOOC and China Union go up and down completely randomly.

Pair Corralation between CNOOC and China Union

Assuming the 90 days trading horizon CNOOC Limited is expected to generate 0.87 times more return on investment than China Union. However, CNOOC Limited is 1.15 times less risky than China Union. It trades about 0.08 of its potential returns per unit of risk. China Union Holdings is currently generating about 0.01 per unit of risk. If you would invest  1,450  in CNOOC Limited on October 12, 2024 and sell it today you would earn a total of  1,408  from holding CNOOC Limited or generate 97.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy99.79%
ValuesDaily Returns

CNOOC Limited  vs.  China Union Holdings

 Performance 
       Timeline  
CNOOC Limited 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

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

CNOOC and China Union Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CNOOC and China Union

The main advantage of trading using opposite CNOOC and China Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNOOC position performs unexpectedly, China Union 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 China Union will offset losses from the drop in China Union's long position.
The idea behind CNOOC Limited and China Union Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

Other Complementary Tools

Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets