Correlation Between SIEM OFFSHORE and China Water

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

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

Diversification Opportunities for SIEM OFFSHORE and China Water

-0.72

Correlation Coefficient

SIEM OFFSHORE  China Water

Pay attention - limited upside

The 3 months correlation between SIEM and China is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding SIEM OFFSHORE NEW and China Water Affairs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Water Affairs and SIEM OFFSHORE 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 SIEM OFFSHORE NEW are associated (or correlated) with China Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Water Affairs has no effect on the direction of SIEM OFFSHORE i.e., SIEM OFFSHORE and China Water go up and down completely randomly.

Pair Corralation between SIEM OFFSHORE and China Water

Assuming the 90 days trading horizon SIEM OFFSHORE NEW is expected to under-perform the China Water. In addition to that, SIEM OFFSHORE is 1.07 times more volatile than China Water Affairs. It trades about -0.12 of its total potential returns per unit of risk. China Water Affairs is currently generating about -0.07 per unit of volatility. If you would invest  59.00  in China Water Affairs on October 10, 2024 and sell it today you would lose (2.00) from holding China Water Affairs or give up 3.39% of portfolio value over 90 days.

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

SIEM OFFSHORE NEW  vs.  China Water Affairs

SIEM OFFSHORE NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIEM OFFSHORE NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

China Water Affairs

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SIEM OFFSHORE and China Water

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

The idea behind SIEM OFFSHORE NEW and China Water Affairs 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.