Correlation Between Constellation Brands and CSSC Offshore

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

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

Diversification Opportunities for Constellation Brands and CSSC Offshore

-0.32

Correlation Coefficient

Constellation Brands  CSSC Offshore

Very good diversification

The 3 months correlation between Constellation and CSSC is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands 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 Constellation Brands 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 Constellation Brands 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 Constellation Brands i.e., Constellation Brands and CSSC Offshore go up and down completely randomly.

Pair Corralation between Constellation Brands and CSSC Offshore

Assuming the 90 days trading horizon Constellation Brands is expected to under-perform the CSSC Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Brands is 2.21 times less risky than CSSC Offshore. The stock trades about -0.22 of its potential returns per unit of risk. The CSSC Offshore Marine is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  124.00  in CSSC Offshore Marine on September 30, 2024 and sell it today you would earn a total of  13.00  from holding CSSC Offshore Marine or generate 10.48% return on investment over 90 days.

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

Constellation Brands  vs.  CSSC Offshore Marine

Constellation Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellation Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Constellation Brands is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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. In spite of comparatively stable basic indicators, CSSC Offshore is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Constellation Brands and CSSC Offshore

The main advantage of trading using opposite Constellation Brands and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands 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 Constellation Brands 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.