Correlation Between CSSC Offshore and EPlay Digital

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

Diversification Opportunities for CSSC Offshore and EPlay Digital

0.0

Correlation Coefficient

CSSC Offshore  EPlay Digital

Pay attention - limited upside

The 3 months correlation between CSSC and EPlay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and ePlay Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ePlay Digital 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 EPlay Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ePlay Digital has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and EPlay Digital go up and down completely randomly.

Pair Corralation between CSSC Offshore and EPlay Digital

Assuming the 90 days trading horizon CSSC Offshore is expected to generate 210.23 times less return on investment than EPlay Digital. But when comparing it to its historical volatility, CSSC Offshore Marine is 37.59 times less risky than EPlay Digital. It trades about 0.03 of its potential returns per unit of risk. ePlay Digital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.80  in ePlay Digital on December 2, 2024 and sell it today you would lose (0.70) from holding ePlay Digital or give up 87.5% of portfolio value over 90 days.

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

CSSC Offshore Marine  vs.  ePlay Digital

CSSC Offshore Marine

Risk-Adjusted Performance

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

ePlay Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days ePlay Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EPlay Digital is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CSSC Offshore and EPlay Digital

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

The idea behind CSSC Offshore Marine and ePlay Digital 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.