Correlation Between 23291KAK1 and Occidental

Can any of the company-specific risk be diversified away by investing in both 23291KAK1 and Occidental 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 23291KAK1 and Occidental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DH EUROPE FINANCE and Occidental Petroleum 44, you can compare the effects of market volatilities on 23291KAK1 and Occidental 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 23291KAK1 with a short position of Occidental. Check out your portfolio center. Please also check ongoing floating volatility patterns of 23291KAK1 and Occidental.

Diversification Opportunities for 23291KAK1 and Occidental

0.4

Correlation Coefficient

23291KAK1  Occidental

Very weak diversification

The 3 months correlation between 23291KAK1 and Occidental is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding DH EUROPE FINANCE and Occidental Petroleum 44 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and 23291KAK1 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 DH EUROPE FINANCE are associated (or correlated) with Occidental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Occidental Petroleum has no effect on the direction of 23291KAK1 i.e., 23291KAK1 and Occidental go up and down completely randomly.

Pair Corralation between 23291KAK1 and Occidental

Assuming the 90 days trading horizon 23291KAK1 is expected to generate 1.88 times less return on investment than Occidental. But when comparing it to its historical volatility, DH EUROPE FINANCE is 2.6 times less risky than Occidental. It trades about 0.21 of its potential returns per unit of risk. Occidental Petroleum 44 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  7,011  in Occidental Petroleum 44 on October 22, 2024 and sell it today you would earn a total of  918.00  from holding Occidental Petroleum 44 or generate 13.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	50.0%
Values	Daily Returns

DH EUROPE FINANCE  vs.  Occidental Petroleum 44

DH EUROPE FINANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DH EUROPE FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 23291KAK1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Occidental Petroleum

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Occidental Petroleum 44 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Occidental may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with 23291KAK1 and Occidental

The main advantage of trading using opposite 23291KAK1 and Occidental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 23291KAK1 position performs unexpectedly, Occidental 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 Occidental will offset losses from the drop in Occidental's long position.

The idea behind DH EUROPE FINANCE and Occidental Petroleum 44 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.