Correlation Between Helmerich Payne and Sinopec Oilfield

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

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

Diversification Opportunities for Helmerich Payne and Sinopec Oilfield

0.79

Correlation Coefficient

Helmerich Payne  Sinopec Oilfield

Poor diversification

The 3 months correlation between Helmerich and Sinopec is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Helmerich Payne and Sinopec Oilfield Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Oilfield Service and Helmerich Payne 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 Helmerich Payne are associated (or correlated) with Sinopec Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Oilfield Service has no effect on the direction of Helmerich Payne i.e., Helmerich Payne and Sinopec Oilfield go up and down completely randomly.

Pair Corralation between Helmerich Payne and Sinopec Oilfield

Assuming the 90 days horizon Helmerich Payne is expected to generate 40.48 times less return on investment than Sinopec Oilfield. But when comparing it to its historical volatility, Helmerich Payne is 2.72 times less risky than Sinopec Oilfield. It trades about 0.0 of its potential returns per unit of risk. Sinopec Oilfield Service is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5.80  in Sinopec Oilfield Service on September 2, 2024 and sell it today you would earn a total of  1.00  from holding Sinopec Oilfield Service or generate 17.24% return on investment over 90 days.

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

Helmerich Payne  vs.  Sinopec Oilfield Service

Helmerich Payne

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Helmerich Payne are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Helmerich Payne reported solid returns over the last few months and may actually be approaching a breakup point.

Sinopec Oilfield Service

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sinopec Oilfield Service are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sinopec Oilfield reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Helmerich Payne and Sinopec Oilfield

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

The idea behind Helmerich Payne and Sinopec Oilfield Service 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.