Correlation Between CSSC Offshore and SILEON AB

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

Diversification Opportunities for CSSC Offshore and SILEON AB

0.07

Correlation Coefficient

CSSC Offshore  SILEON AB

Significant diversification

The 3 months correlation between CSSC and SILEON is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and SILEON AB ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SILEON AB ON 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 SILEON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SILEON AB ON has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and SILEON AB go up and down completely randomly.

Pair Corralation between CSSC Offshore and SILEON AB

Assuming the 90 days trading horizon CSSC Offshore is expected to generate 361.83 times less return on investment than SILEON AB. But when comparing it to its historical volatility, CSSC Offshore Marine is 80.73 times less risky than SILEON AB. It trades about 0.05 of its potential returns per unit of risk. SILEON AB ON is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,660  in SILEON AB ON on October 3, 2024 and sell it today you would lose (1,614) from holding SILEON AB ON or give up 97.23% of portfolio value over 90 days.

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

CSSC Offshore Marine  vs.  SILEON AB ON

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

SILEON AB ON

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SILEON AB ON are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SILEON AB reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSSC Offshore and SILEON AB

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

The idea behind CSSC Offshore Marine and SILEON AB ON 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.