Correlation Between CSSC Offshore and ON SEMICONDUCTOR

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

Diversification Opportunities for CSSC Offshore and ON SEMICONDUCTOR

-0.07

Correlation Coefficient

CSSC Offshore  ON SEMICONDUCTOR

Good diversification

The 3 months correlation between CSSC and XS4 is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and ON SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON SEMICONDUCTOR 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 ON SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON SEMICONDUCTOR has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and ON SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between CSSC Offshore and ON SEMICONDUCTOR

Assuming the 90 days trading horizon CSSC Offshore Marine is expected to under-perform the ON SEMICONDUCTOR. In addition to that, CSSC Offshore is 1.42 times more volatile than ON SEMICONDUCTOR. It trades about -0.04 of its total potential returns per unit of risk. ON SEMICONDUCTOR is currently generating about 0.01 per unit of volatility. If you would invest  6,404  in ON SEMICONDUCTOR on September 28, 2024 and sell it today you would lose (48.00) from holding ON SEMICONDUCTOR or give up 0.75% of portfolio value over 90 days.

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

CSSC Offshore Marine  vs.  ON SEMICONDUCTOR

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 latest unsteady 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.

ON SEMICONDUCTOR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CSSC Offshore and ON SEMICONDUCTOR

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

The idea behind CSSC Offshore Marine and ON SEMICONDUCTOR 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.