Correlation Between SILICON LABORATOR and China Oilfield

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

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

Diversification Opportunities for SILICON LABORATOR and China Oilfield

0.02

Correlation Coefficient

SILICON LABORATOR  China Oilfield

Significant diversification

The 3 months correlation between SILICON and China is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding SILICON LABORATOR 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 SILICON LABORATOR 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 SILICON LABORATOR 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 SILICON LABORATOR i.e., SILICON LABORATOR and China Oilfield go up and down completely randomly.

Pair Corralation between SILICON LABORATOR and China Oilfield

Assuming the 90 days trading horizon SILICON LABORATOR is expected to under-perform the China Oilfield. In addition to that, SILICON LABORATOR is 1.47 times more volatile than China Oilfield Services. It trades about -0.02 of its total potential returns per unit of risk. China Oilfield Services is currently generating about 0.01 per unit of volatility. If you would invest  80.00  in China Oilfield Services on December 21, 2024 and sell it today you would earn a total of  0.00  from holding China Oilfield Services or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

SILICON LABORATOR  vs.  China Oilfield Services

SILICON LABORATOR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SILICON LABORATOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SILICON LABORATOR is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

China Oilfield Services

Risk-Adjusted Performance

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 SILICON LABORATOR and China Oilfield

The main advantage of trading using opposite SILICON LABORATOR and China Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SILICON LABORATOR 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 SILICON LABORATOR 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.