Correlation Between Qingdao Choho and CSSC Offshore

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

By analyzing existing cross correlation between Qingdao Choho Industrial and CSSC Offshore Marine, you can compare the effects of market volatilities on Qingdao Choho and CSSC Offshore 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 Qingdao Choho with a short position of CSSC Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Choho and CSSC Offshore.

Diversification Opportunities for Qingdao Choho and CSSC Offshore

0.05

Correlation Coefficient

Qingdao Choho  CSSC Offshore

Significant diversification

The 3 months correlation between Qingdao and CSSC is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Choho Industrial and CSSC Offshore Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSSC Offshore Marine and Qingdao Choho 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 Qingdao Choho Industrial are associated (or correlated) with CSSC Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSSC Offshore Marine has no effect on the direction of Qingdao Choho i.e., Qingdao Choho and CSSC Offshore go up and down completely randomly.

Pair Corralation between Qingdao Choho and CSSC Offshore

Assuming the 90 days trading horizon Qingdao Choho Industrial is expected to generate 1.32 times more return on investment than CSSC Offshore. However, Qingdao Choho is 1.32 times more volatile than CSSC Offshore Marine. It trades about 0.05 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about -0.06 per unit of risk. If you would invest  2,634  in Qingdao Choho Industrial on September 29, 2024 and sell it today you would earn a total of  156.00  from holding Qingdao Choho Industrial or generate 5.92% return on investment over 90 days.

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

Qingdao Choho Industrial  vs.  CSSC Offshore Marine

Qingdao Choho Industrial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Choho Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Qingdao Choho may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CSSC Offshore Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSSC Offshore Marine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Qingdao Choho and CSSC Offshore

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

The idea behind Qingdao Choho Industrial and CSSC Offshore Marine 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.