Correlation Between Opera and China Gas

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

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

Diversification Opportunities for Opera and China Gas

-0.52

Correlation Coefficient

Opera  China Gas

Excellent diversification

The 3 months correlation between Opera and China is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Opera and China Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Gas Holdings and Opera 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 Opera are associated (or correlated) with China Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Gas Holdings has no effect on the direction of Opera i.e., Opera and China Gas go up and down completely randomly.

Pair Corralation between Opera and China Gas

If you would invest (100.00) in Opera on October 23, 2024 and sell it today you would earn a total of  100.00  from holding Opera or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Opera  vs.  China Gas Holdings

Opera

Risk-Adjusted Performance

0 of 100

Insignificant

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

China Gas Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Gas Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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 Opera and China Gas

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

The idea behind Opera and China Gas Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.