Correlation Between CSSC Offshore and China Mobile

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

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

Diversification Opportunities for CSSC Offshore and China Mobile

-0.54

Correlation Coefficient

CSSC Offshore  China Mobile

Excellent diversification

The 3 months correlation between CSSC and China is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and China Mobile Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile Limited and CSSC Offshore 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 CSSC Offshore Marine are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile Limited has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and China Mobile go up and down completely randomly.

Pair Corralation between CSSC Offshore and China Mobile

Assuming the 90 days trading horizon CSSC Offshore Marine is expected to under-perform the China Mobile. In addition to that, CSSC Offshore is 1.22 times more volatile than China Mobile Limited. It trades about -0.22 of its total potential returns per unit of risk. China Mobile Limited is currently generating about 0.19 per unit of volatility. If you would invest  10,285  in China Mobile Limited on October 6, 2024 and sell it today you would earn a total of  1,123  from holding China Mobile Limited or generate 10.92% return on investment over 90 days.

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

CSSC Offshore Marine  vs.  China Mobile Limited

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.

China Mobile Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Mobile Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, China Mobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CSSC Offshore and China Mobile

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

The idea behind CSSC Offshore Marine and China Mobile Limited 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .