Correlation Between Xinjiang Communications and CSSC Offshore
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By analyzing existing cross correlation between Xinjiang Communications Construction and CSSC Offshore Marine, you can compare the effects of market volatilities on Xinjiang Communications and CSSC Offshore 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 Xinjiang Communications with a short position of CSSC Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Communications and CSSC Offshore.
Diversification Opportunities for Xinjiang Communications and CSSC Offshore
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xinjiang and CSSC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Communications Constr and CSSC Offshore Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSSC Offshore Marine and Xinjiang Communications 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 Xinjiang Communications Construction are associated (or correlated) with CSSC Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSSC Offshore Marine has no effect on the direction of Xinjiang Communications i.e., Xinjiang Communications and CSSC Offshore go up and down completely randomly.
Pair Corralation between Xinjiang Communications and CSSC Offshore
Assuming the 90 days trading horizon Xinjiang Communications Construction is expected to generate 1.5 times more return on investment than CSSC Offshore. However, Xinjiang Communications is 1.5 times more volatile than CSSC Offshore Marine. It trades about 0.19 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about 0.14 per unit of risk. If you would invest 1,053 in Xinjiang Communications Construction on November 9, 2024 and sell it today you would earn a total of 56.00 from holding Xinjiang Communications Construction or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xinjiang Communications Constr vs. CSSC Offshore Marine
Performance |
| Timeline |
| Xinjiang Communications |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| CSSC Offshore Marine |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Xinjiang Communications and CSSC Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xinjiang Communications and CSSC Offshore
The main advantage of trading using opposite Xinjiang Communications and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinjiang Communications position performs unexpectedly, CSSC Offshore 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 CSSC Offshore will offset losses from the drop in CSSC Offshore's long position.The idea behind Xinjiang Communications Construction and CSSC Offshore Marine 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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