Correlation Between China Communications and CSSC Offshore
Can any of the company-specific risk be diversified away by investing in both China Communications and CSSC Offshore 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 China Communications and CSSC Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and CSSC Offshore Marine, you can compare the effects of market volatilities on China 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 China Communications with a short position of CSSC Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and CSSC Offshore.
Diversification Opportunities for China Communications and CSSC Offshore
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and CSSC is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services 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 China 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 China Communications Services 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 China Communications i.e., China Communications and CSSC Offshore go up and down completely randomly.
Pair Corralation between China Communications and CSSC Offshore
Assuming the 90 days horizon China Communications Services is expected to generate 2.09 times more return on investment than CSSC Offshore. However, China Communications is 2.09 times more volatile than CSSC Offshore Marine. It trades about 0.08 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about 0.04 per unit of risk. If you would invest 9.05 in China Communications Services on October 23, 2024 and sell it today you would earn a total of 42.95 from holding China Communications Services or generate 474.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. CSSC Offshore Marine
Performance |
| Timeline |
| China Communications |
| CSSC Offshore Marine |
China Communications and CSSC Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and CSSC Offshore
The main advantage of trading using opposite China Communications and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China 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.| China Communications vs. GameStop Corp | China Communications vs. CONTAGIOUS GAMING INC | China Communications vs. CODERE ONLINE LUX | China Communications vs. Gaming and Leisure |
| CSSC Offshore vs. CITIC Telecom International | CSSC Offshore vs. OPKO HEALTH | CSSC Offshore vs. TELECOM ITALIA | CSSC Offshore vs. China Communications Services |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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