Correlation Between INTER CARS and CNOOC

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

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

Diversification Opportunities for INTER CARS and CNOOC

0.19

Correlation Coefficient

INTER CARS  CNOOC

Average diversification

The 3 months correlation between INTER and CNOOC is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and CNOOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC and INTER CARS 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 INTER CARS SA 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 INTER CARS i.e., INTER CARS and CNOOC go up and down completely randomly.

Pair Corralation between INTER CARS and CNOOC

Assuming the 90 days horizon INTER CARS is expected to generate 8.3 times less return on investment than CNOOC. But when comparing it to its historical volatility, INTER CARS SA is 2.64 times less risky than CNOOC. It trades about 0.03 of its potential returns per unit of risk. CNOOC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  19.00  in CNOOC on October 4, 2024 and sell it today you would earn a total of  199.00  from holding CNOOC or generate 1047.37% return on investment over 90 days.

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

INTER CARS SA  vs.  CNOOC

INTER CARS SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, INTER CARS is not utilizing all of its potentials. The current 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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with INTER CARS and CNOOC

The main advantage of trading using opposite INTER CARS and CNOOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS 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 INTER CARS SA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.