Correlation Between CSSC Offshore and Hygon Information

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

Diversification Opportunities for CSSC Offshore and Hygon Information

-0.4

Correlation Coefficient

CSSC Offshore  Hygon Information

Very good diversification

The 3 months correlation between CSSC and Hygon is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and Hygon Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hygon Information 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 Hygon Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hygon Information has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and Hygon Information go up and down completely randomly.

Pair Corralation between CSSC Offshore and Hygon Information

Assuming the 90 days trading horizon CSSC Offshore Marine is expected to under-perform the Hygon Information. But the stock apears to be less risky and, when comparing its historical volatility, CSSC Offshore Marine is 2.18 times less risky than Hygon Information. The stock trades about -0.1 of its potential returns per unit of risk. The Hygon Information Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12,200  in Hygon Information Technology on October 25, 2024 and sell it today you would earn a total of  1,047  from holding Hygon Information Technology or generate 8.58% 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.  Hygon Information Technology

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hygon Information

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with CSSC Offshore and Hygon Information

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

The idea behind CSSC Offshore Marine and Hygon Information Technology 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.