Correlation Between CNOOC and ConocoPhillips

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

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

Diversification Opportunities for CNOOC and ConocoPhillips

0.0

Correlation Coefficient

CNOOC  ConocoPhillips

Pay attention - limited upside

The 3 months correlation between CNOOC and ConocoPhillips is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CNOOC Limited and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and CNOOC 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 CNOOC Limited are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of CNOOC i.e., CNOOC and ConocoPhillips go up and down completely randomly.

Pair Corralation between CNOOC and ConocoPhillips

If you would invest  11,164  in ConocoPhillips on February 1, 2024 and sell it today you would earn a total of  1,270  from holding ConocoPhillips or generate 11.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CNOOC Limited  vs.  ConocoPhillips

CNOOC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNOOC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, CNOOC is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

ConocoPhillips

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, ConocoPhillips may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with CNOOC and ConocoPhillips

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

The idea behind CNOOC Limited and ConocoPhillips 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.