Correlation Between Equinix and China Oilfield

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

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

Diversification Opportunities for Equinix and China Oilfield

-0.51

Correlation Coefficient

Equinix  China Oilfield

Excellent diversification

The 3 months correlation between Equinix and China is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and China Oilfield Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Oilfield Services and Equinix 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 Equinix are associated (or correlated) with China Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Oilfield Services has no effect on the direction of Equinix i.e., Equinix and China Oilfield go up and down completely randomly.

Pair Corralation between Equinix and China Oilfield

If you would invest  64.00  in China Oilfield Services on October 13, 2024 and sell it today you would earn a total of  22.00  from holding China Oilfield Services or generate 34.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.2%
Values	Daily Returns

Equinix  vs.  China Oilfield Services

Equinix

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Equinix has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Equinix reported solid returns over the last few months and may actually be approaching a breakup point.

China Oilfield Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Equinix and China Oilfield

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

The idea behind Equinix and China Oilfield Services 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.