Correlation Between CSSC Offshore and Ye Chiu

Can any of the company-specific risk be diversified away by investing in both CSSC Offshore and Ye Chiu 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 Ye Chiu 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 Ye Chiu Metal, you can compare the effects of market volatilities on CSSC Offshore and Ye Chiu 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 Ye Chiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSSC Offshore and Ye Chiu.

Diversification Opportunities for CSSC Offshore and Ye Chiu

0.26

Correlation Coefficient

CSSC Offshore  Ye Chiu

Modest diversification

The 3 months correlation between CSSC and 601388 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and Ye Chiu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ye Chiu Metal 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 Ye Chiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ye Chiu Metal has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and Ye Chiu go up and down completely randomly.

Pair Corralation between CSSC Offshore and Ye Chiu

Assuming the 90 days trading horizon CSSC Offshore Marine is expected to generate 0.94 times more return on investment than Ye Chiu. However, CSSC Offshore Marine is 1.06 times less risky than Ye Chiu. It trades about 0.02 of its potential returns per unit of risk. Ye Chiu Metal is currently generating about 0.0 per unit of risk. If you would invest  2,156  in CSSC Offshore Marine on September 22, 2024 and sell it today you would earn a total of  269.00  from holding CSSC Offshore Marine or generate 12.48% return on investment over 90 days.

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

CSSC Offshore Marine  vs.  Ye Chiu Metal

CSSC Offshore Marine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSSC Offshore Marine are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CSSC Offshore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ye Chiu Metal

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ye Chiu Metal are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ye Chiu sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSSC Offshore and Ye Chiu

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

The idea behind CSSC Offshore Marine and Ye Chiu Metal 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.