Correlation Between PKSHA TECHNOLOGY and CNOOC

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

By analyzing existing cross correlation between PKSHA TECHNOLOGY INC and CNOOC, you can compare the effects of market volatilities on PKSHA TECHNOLOGY and CNOOC 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 PKSHA TECHNOLOGY with a short position of CNOOC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PKSHA TECHNOLOGY and CNOOC.

Diversification Opportunities for PKSHA TECHNOLOGY and CNOOC

-0.29

Correlation Coefficient

PKSHA TECHNOLOGY  CNOOC

Very good diversification

The 3 months correlation between PKSHA and CNOOC is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC and CNOOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC are associated (or correlated) with CNOOC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNOOC has no effect on the direction of PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and CNOOC go up and down completely randomly.

Pair Corralation between PKSHA TECHNOLOGY and CNOOC

Assuming the 90 days horizon PKSHA TECHNOLOGY is expected to generate 3.67 times less return on investment than CNOOC. But when comparing it to its historical volatility, PKSHA TECHNOLOGY INC is 1.55 times less risky than CNOOC. It trades about 0.04 of its potential returns per unit of risk. CNOOC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  20.00  in CNOOC on October 25, 2024 and sell it today you would earn a total of  198.00  from holding CNOOC or generate 990.0% return on investment over 90 days.

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

PKSHA TECHNOLOGY INC  vs.  CNOOC

PKSHA TECHNOLOGY INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PKSHA TECHNOLOGY INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PKSHA TECHNOLOGY is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CNOOC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNOOC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CNOOC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PKSHA TECHNOLOGY and CNOOC

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

The idea behind PKSHA TECHNOLOGY INC and CNOOC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.