Correlation Between Calibre Mining and China Oilfield

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

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

Diversification Opportunities for Calibre Mining and China Oilfield

0.12

Correlation Coefficient

Calibre Mining  China Oilfield

Average diversification

The 3 months correlation between Calibre and China is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Calibre Mining Corp 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 Calibre Mining 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 Calibre Mining Corp 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 Calibre Mining i.e., Calibre Mining and China Oilfield go up and down completely randomly.

Pair Corralation between Calibre Mining and China Oilfield

Assuming the 90 days trading horizon Calibre Mining Corp is expected to generate 0.89 times more return on investment than China Oilfield. However, Calibre Mining Corp is 1.13 times less risky than China Oilfield. It trades about 0.07 of its potential returns per unit of risk. China Oilfield Services is currently generating about 0.03 per unit of risk. If you would invest  74.00  in Calibre Mining Corp on October 24, 2024 and sell it today you would earn a total of  88.00  from holding Calibre Mining Corp or generate 118.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Calibre Mining Corp  vs.  China Oilfield Services

Calibre Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calibre Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Calibre Mining is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

China Oilfield Services

Risk-Adjusted Performance

0 of 100

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Calibre Mining and China Oilfield

The main advantage of trading using opposite Calibre Mining and China Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calibre Mining 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 Calibre Mining Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.