Correlation Between CNOOC and Unisplendour Corp

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

By analyzing existing cross correlation between CNOOC Limited and Unisplendour Corp, you can compare the effects of market volatilities on CNOOC and Unisplendour Corp 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 Unisplendour Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNOOC and Unisplendour Corp.

Diversification Opportunities for CNOOC and Unisplendour Corp

0.03

Correlation Coefficient

CNOOC  Unisplendour Corp

Significant diversification

The 3 months correlation between CNOOC and Unisplendour is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding CNOOC Limited and Unisplendour Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisplendour Corp 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 Unisplendour Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisplendour Corp has no effect on the direction of CNOOC i.e., CNOOC and Unisplendour Corp go up and down completely randomly.

Pair Corralation between CNOOC and Unisplendour Corp

Assuming the 90 days trading horizon CNOOC is expected to generate 1.24 times less return on investment than Unisplendour Corp. But when comparing it to its historical volatility, CNOOC Limited is 1.46 times less risky than Unisplendour Corp. It trades about 0.37 of its potential returns per unit of risk. Unisplendour Corp is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  2,427  in Unisplendour Corp on September 27, 2024 and sell it today you would earn a total of  336.00  from holding Unisplendour Corp or generate 13.84% return on investment over 90 days.

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

CNOOC Limited  vs.  Unisplendour Corp

CNOOC Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CNOOC Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CNOOC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Unisplendour Corp

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unisplendour Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Unisplendour Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CNOOC and Unisplendour Corp

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

The idea behind CNOOC Limited and Unisplendour Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.