Correlation Between CSSC Offshore and Global Ship

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

Diversification Opportunities for CSSC Offshore and Global Ship

0.75

Correlation Coefficient

CSSC Offshore  Global Ship

Poor diversification

The 3 months correlation between CSSC and Global is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and Global Ship go up and down completely randomly.

Pair Corralation between CSSC Offshore and Global Ship

Assuming the 90 days trading horizon CSSC Offshore Marine is expected to generate 1.93 times more return on investment than Global Ship. However, CSSC Offshore is 1.93 times more volatile than Global Ship Lease. It trades about 0.24 of its potential returns per unit of risk. Global Ship Lease is currently generating about -0.06 per unit of risk. If you would invest  121.00  in CSSC Offshore Marine on September 27, 2024 and sell it today you would earn a total of  14.00  from holding CSSC Offshore Marine or generate 11.57% return on investment over 90 days.

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

CSSC Offshore Marine  vs.  Global Ship Lease

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.

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CSSC Offshore and Global Ship

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

The idea behind CSSC Offshore Marine and Global Ship Lease 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.