Correlation Between CSSC Offshore and APT Medical

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

Diversification Opportunities for CSSC Offshore and APT Medical

0.04

Correlation Coefficient

CSSC Offshore  APT Medical

Significant diversification

The 3 months correlation between CSSC and APT is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and APT Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Medical 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 APT Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Medical has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and APT Medical go up and down completely randomly.

Pair Corralation between CSSC Offshore and APT Medical

Assuming the 90 days trading horizon CSSC Offshore Marine is expected to under-perform the APT Medical. But the stock apears to be less risky and, when comparing its historical volatility, CSSC Offshore Marine is 1.52 times less risky than APT Medical. The stock trades about -0.11 of its potential returns per unit of risk. The APT Medical is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  36,300  in APT Medical on October 23, 2024 and sell it today you would lose (362.00) from holding APT Medical or give up 1.0% of portfolio value over 90 days.

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

CSSC Offshore Marine  vs.  APT Medical

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.

APT Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APT Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APT Medical 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 APT Medical

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

The idea behind CSSC Offshore Marine and APT Medical 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 Stocks Directory module to find actively traded stocks across global markets.