Correlation Between HF FOODS and CSSC Offshore

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

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

Diversification Opportunities for HF FOODS and CSSC Offshore

-0.63

Correlation Coefficient

HF FOODS  CSSC Offshore

Excellent diversification

The 3 months correlation between 3GX and CSSC is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding HF FOODS GRP 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 HF FOODS 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 HF FOODS GRP 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 HF FOODS i.e., HF FOODS and CSSC Offshore go up and down completely randomly.

Pair Corralation between HF FOODS and CSSC Offshore

Assuming the 90 days horizon HF FOODS is expected to generate 4.8 times less return on investment than CSSC Offshore. In addition to that, HF FOODS is 1.3 times more volatile than CSSC Offshore Marine. It trades about 0.01 of its total potential returns per unit of risk. CSSC Offshore Marine is currently generating about 0.04 per unit of volatility. If you would invest  86.00  in CSSC Offshore Marine on September 26, 2024 and sell it today you would earn a total of  49.00  from holding CSSC Offshore Marine or generate 56.98% return on investment over 90 days.

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

HF FOODS GRP  vs.  CSSC Offshore Marine

HF FOODS GRP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HF FOODS GRP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HF FOODS 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. In spite of comparatively stable basic indicators, CSSC Offshore is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HF FOODS and CSSC Offshore

The main advantage of trading using opposite HF FOODS and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF FOODS 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 HF FOODS GRP 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.