Correlation Between CSSC Offshore and GRIPM Advanced

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

Diversification Opportunities for CSSC Offshore and GRIPM Advanced

0.39

Correlation Coefficient

CSSC Offshore  GRIPM Advanced

Weak diversification

The 3 months correlation between CSSC and GRIPM is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and GRIPM Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRIPM Advanced Materials 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 GRIPM Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRIPM Advanced Materials has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and GRIPM Advanced go up and down completely randomly.

Pair Corralation between CSSC Offshore and GRIPM Advanced

Assuming the 90 days trading horizon CSSC Offshore Marine is expected to under-perform the GRIPM Advanced. But the stock apears to be less risky and, when comparing its historical volatility, CSSC Offshore Marine is 1.47 times less risky than GRIPM Advanced. The stock trades about -0.03 of its potential returns per unit of risk. The GRIPM Advanced Materials is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,579  in GRIPM Advanced Materials on September 18, 2024 and sell it today you would earn a total of  821.00  from holding GRIPM Advanced Materials or generate 31.83% 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.  GRIPM Advanced Materials

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 somewhat strong basic indicators, CSSC Offshore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GRIPM Advanced Materials

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GRIPM Advanced Materials are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GRIPM Advanced sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSSC Offshore and GRIPM Advanced

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

The idea behind CSSC Offshore Marine and GRIPM Advanced Materials 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.