Correlation Between Beijing Wantai and CSSC Offshore

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

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

Diversification Opportunities for Beijing Wantai and CSSC Offshore

0.49

Correlation Coefficient

Beijing Wantai  CSSC Offshore

Very weak diversification

The 3 months correlation between Beijing and CSSC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Wantai Biological and CSSC Offshore Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSSC Offshore Marine and Beijing Wantai 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 Beijing Wantai Biological are associated (or correlated) with CSSC Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSSC Offshore Marine has no effect on the direction of Beijing Wantai i.e., Beijing Wantai and CSSC Offshore go up and down completely randomly.

Pair Corralation between Beijing Wantai and CSSC Offshore

Assuming the 90 days trading horizon Beijing Wantai Biological is expected to under-perform the CSSC Offshore. In addition to that, Beijing Wantai is 1.51 times more volatile than CSSC Offshore Marine. It trades about -0.08 of its total potential returns per unit of risk. CSSC Offshore Marine is currently generating about 0.03 per unit of volatility. If you would invest  2,426  in CSSC Offshore Marine on December 25, 2024 and sell it today you would earn a total of  45.00  from holding CSSC Offshore Marine or generate 1.85% return on investment over 90 days.

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

Beijing Wantai Biological  vs.  CSSC Offshore Marine

Beijing Wantai Biological

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beijing Wantai Biological 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.

CSSC Offshore Marine

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSSC Offshore Marine are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Beijing Wantai and CSSC Offshore

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

The idea behind Beijing Wantai Biological and CSSC Offshore Marine 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.