Correlation Between Commerce Bancshares and CSSC Offshore

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

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

Diversification Opportunities for Commerce Bancshares and CSSC Offshore

-0.77

Correlation Coefficient

Commerce Bancshares  CSSC Offshore

Pay attention - limited upside

The 3 months correlation between Commerce and CSSC is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Bancshares 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 Commerce Bancshares 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 Commerce Bancshares 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 Commerce Bancshares i.e., Commerce Bancshares and CSSC Offshore go up and down completely randomly.

Pair Corralation between Commerce Bancshares and CSSC Offshore

Assuming the 90 days horizon Commerce Bancshares is expected to generate 4.82 times less return on investment than CSSC Offshore. But when comparing it to its historical volatility, Commerce Bancshares is 1.61 times less risky than CSSC Offshore. It trades about 0.02 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  78.00  in CSSC Offshore Marine on October 4, 2024 and sell it today you would earn a total of  59.00  from holding CSSC Offshore Marine or generate 75.64% return on investment over 90 days.

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

Commerce Bancshares  vs.  CSSC Offshore Marine

Commerce Bancshares

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Bancshares are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Commerce Bancshares reported solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Commerce Bancshares and CSSC Offshore

The main advantage of trading using opposite Commerce Bancshares and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerce Bancshares 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 Commerce Bancshares 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.