Correlation Between Cabo Drilling and China Finance

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

Diversification Opportunities for Cabo Drilling and China Finance

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Cabo and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cabo Drilling Corp and China Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Finance and Cabo Drilling 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 Cabo Drilling Corp are associated (or correlated) with China Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Finance has no effect on the direction of Cabo Drilling i.e., Cabo Drilling and China Finance go up and down completely randomly.

Pair Corralation between Cabo Drilling and China Finance

If you would invest  0.00  in China Finance on October 25, 2024 and sell it today you would earn a total of  0.00  from holding China Finance or generate 9.223372036854776E16% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cabo Drilling Corp  vs.  China Finance

 Performance 
       Timeline  
Cabo Drilling Corp 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Cabo Drilling Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Cabo Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
China Finance 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in China Finance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, China Finance demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cabo Drilling and China Finance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cabo Drilling and China Finance

The main advantage of trading using opposite Cabo Drilling and China Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabo Drilling position performs unexpectedly, China Finance 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 Finance will offset losses from the drop in China Finance's long position.
The idea behind Cabo Drilling Corp and China Finance 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 Valuation module to check real value of public entities based on technical and fundamental data.

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