Correlation Between AVIC Fund and CSSC Offshore

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

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

Diversification Opportunities for AVIC Fund and CSSC Offshore

-0.56

Correlation Coefficient

AVIC Fund  CSSC Offshore

Excellent diversification

The 3 months correlation between AVIC and CSSC is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding AVIC Fund Management 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 AVIC Fund 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 AVIC Fund Management 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 AVIC Fund i.e., AVIC Fund and CSSC Offshore go up and down completely randomly.

Pair Corralation between AVIC Fund and CSSC Offshore

Assuming the 90 days trading horizon AVIC Fund is expected to generate 1.19 times less return on investment than CSSC Offshore. But when comparing it to its historical volatility, AVIC Fund Management is 3.33 times less risky than CSSC Offshore. It trades about 0.06 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,041  in CSSC Offshore Marine on October 4, 2024 and sell it today you would earn a total of  257.00  from holding CSSC Offshore Marine or generate 12.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.75%
Values	Daily Returns

AVIC Fund Management  vs.  CSSC Offshore Marine

AVIC Fund Management

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC Fund Management are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AVIC Fund may actually be approaching a critical reversion point that can send shares even higher in February 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 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 AVIC Fund and CSSC Offshore

The main advantage of trading using opposite AVIC Fund and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVIC Fund 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 AVIC Fund Management 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.