Correlation Between King Strong and CSSC Offshore

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

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

Diversification Opportunities for King Strong and CSSC Offshore

0.05

Correlation Coefficient

King Strong  CSSC Offshore

Significant diversification

The 3 months correlation between King and CSSC is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding King Strong New Material 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 King Strong 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 King Strong New Material 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 King Strong i.e., King Strong and CSSC Offshore go up and down completely randomly.

Pair Corralation between King Strong and CSSC Offshore

Assuming the 90 days trading horizon King Strong New Material is expected to generate 2.07 times more return on investment than CSSC Offshore. However, King Strong is 2.07 times more volatile than CSSC Offshore Marine. It trades about 0.02 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about -0.12 per unit of risk. If you would invest  1,925  in King Strong New Material on October 10, 2024 and sell it today you would earn a total of  4.00  from holding King Strong New Material or generate 0.21% return on investment over 90 days.

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

King Strong New Material  vs.  CSSC Offshore Marine

King Strong New

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in King Strong New Material are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, King Strong is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with King Strong and CSSC Offshore

The main advantage of trading using opposite King Strong and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if King Strong 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 King Strong New Material 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.