Correlation Between Rayonier Advanced and CNOOC
Can any of the company-specific risk be diversified away by investing in both Rayonier Advanced and CNOOC 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 Rayonier Advanced and CNOOC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rayonier Advanced Materials and CNOOC, you can compare the effects of market volatilities on Rayonier Advanced and CNOOC 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 Rayonier Advanced with a short position of CNOOC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rayonier Advanced and CNOOC.
Diversification Opportunities for Rayonier Advanced and CNOOC
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rayonier and CNOOC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier Advanced Materials and CNOOC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNOOC and Rayonier Advanced 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 Rayonier Advanced Materials are associated (or correlated) with CNOOC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNOOC has no effect on the direction of Rayonier Advanced i.e., Rayonier Advanced and CNOOC go up and down completely randomly.
Pair Corralation between Rayonier Advanced and CNOOC
Assuming the 90 days horizon Rayonier Advanced Materials is expected to generate 34.08 times more return on investment than CNOOC. However, Rayonier Advanced is 34.08 times more volatile than CNOOC. It trades about 0.03 of its potential returns per unit of risk. CNOOC is currently generating about -0.13 per unit of risk. If you would invest 745.00 in Rayonier Advanced Materials on October 27, 2024 and sell it today you would earn a total of 15.00 from holding Rayonier Advanced Materials or generate 2.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Rayonier Advanced Materials vs. CNOOC
Performance |
Timeline |
Rayonier Advanced |
CNOOC |
Rayonier Advanced and CNOOC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rayonier Advanced and CNOOC
The main advantage of trading using opposite Rayonier Advanced and CNOOC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rayonier Advanced position performs unexpectedly, CNOOC 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 CNOOC will offset losses from the drop in CNOOC's long position.Rayonier Advanced vs. AIR LIQUIDE ADR | Rayonier Advanced vs. Air Products and | Rayonier Advanced vs. Shin Etsu Chemical Co | Rayonier Advanced vs. BASF SE |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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