Correlation Between CSSC Offshore and VITEC SOFTWARE

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

Diversification Opportunities for CSSC Offshore and VITEC SOFTWARE

-0.47

Correlation Coefficient

CSSC Offshore  VITEC SOFTWARE

Very good diversification

The 3 months correlation between CSSC and VITEC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and VITEC SOFTWARE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VITEC SOFTWARE GROUP 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 VITEC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VITEC SOFTWARE GROUP has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and VITEC SOFTWARE go up and down completely randomly.

Pair Corralation between CSSC Offshore and VITEC SOFTWARE

Assuming the 90 days trading horizon CSSC Offshore Marine is expected to under-perform the VITEC SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, CSSC Offshore Marine is 2.51 times less risky than VITEC SOFTWARE. The stock trades about -0.22 of its potential returns per unit of risk. The VITEC SOFTWARE GROUP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,630  in VITEC SOFTWARE GROUP on December 27, 2024 and sell it today you would earn a total of  625.00  from holding VITEC SOFTWARE GROUP or generate 13.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

CSSC Offshore Marine  vs.  VITEC SOFTWARE GROUP

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VITEC SOFTWARE GROUP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VITEC SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSSC Offshore and VITEC SOFTWARE

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

The idea behind CSSC Offshore Marine and VITEC SOFTWARE GROUP 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.