Correlation Between CSBC Corp and First Steamship

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

By analyzing existing cross correlation between CSBC Corp Taiwan and First Steamship Co, you can compare the effects of market volatilities on CSBC Corp and First Steamship 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 CSBC Corp with a short position of First Steamship. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSBC Corp and First Steamship.

Diversification Opportunities for CSBC Corp and First Steamship

0.47

Correlation Coefficient

CSBC Corp  First Steamship

Very weak diversification

The 3 months correlation between CSBC and First is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CSBC Corp Taiwan and First Steamship Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Steamship and CSBC Corp 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 CSBC Corp Taiwan are associated (or correlated) with First Steamship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Steamship has no effect on the direction of CSBC Corp i.e., CSBC Corp and First Steamship go up and down completely randomly.

Pair Corralation between CSBC Corp and First Steamship

Assuming the 90 days trading horizon CSBC Corp Taiwan is expected to under-perform the First Steamship. But the stock apears to be less risky and, when comparing its historical volatility, CSBC Corp Taiwan is 1.75 times less risky than First Steamship. The stock trades about -0.11 of its potential returns per unit of risk. The First Steamship Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  719.00  in First Steamship Co on September 14, 2024 and sell it today you would earn a total of  24.00  from holding First Steamship Co or generate 3.34% return on investment over 90 days.

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

CSBC Corp Taiwan  vs.  First Steamship Co

CSBC Corp Taiwan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSBC Corp Taiwan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

First Steamship

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Steamship Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, First Steamship is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CSBC Corp and First Steamship

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

The idea behind CSBC Corp Taiwan and First Steamship Co 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.