Correlation Between BG Foods and CSSC Offshore

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

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

Diversification Opportunities for BG Foods and CSSC Offshore

0.41

Correlation Coefficient

BG Foods  CSSC Offshore

Very weak diversification

The 3 months correlation between DHR and CSSC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods 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 BG Foods 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 BG Foods 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 BG Foods i.e., BG Foods and CSSC Offshore go up and down completely randomly.

Pair Corralation between BG Foods and CSSC Offshore

Assuming the 90 days trading horizon BG Foods is expected to generate 1.3 times more return on investment than CSSC Offshore. However, BG Foods is 1.3 times more volatile than CSSC Offshore Marine. It trades about -0.07 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about -0.1 per unit of risk. If you would invest  728.00  in BG Foods on October 25, 2024 and sell it today you would lose (106.00) from holding BG Foods or give up 14.56% of portfolio value over 90 days.

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

BG Foods  vs.  CSSC Offshore Marine

BG Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BG Foods 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 rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 BG Foods and CSSC Offshore

The main advantage of trading using opposite BG Foods and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BG Foods 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 BG Foods 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.