Correlation Between CSSC Offshore and NEXTDC
Can any of the company-specific risk be diversified away by investing in both CSSC Offshore and NEXTDC 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 NEXTDC 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 NEXTDC LTD, you can compare the effects of market volatilities on CSSC Offshore and NEXTDC 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 NEXTDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSSC Offshore and NEXTDC.
Diversification Opportunities for CSSC Offshore and NEXTDC
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CSSC and NEXTDC is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and NEXTDC LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXTDC LTD 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 NEXTDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXTDC LTD has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and NEXTDC go up and down completely randomly.
Pair Corralation between CSSC Offshore and NEXTDC
Assuming the 90 days trading horizon CSSC Offshore Marine is expected to under-perform the NEXTDC. But the stock apears to be less risky and, when comparing its historical volatility, CSSC Offshore Marine is 4.3 times less risky than NEXTDC. The stock trades about -0.28 of its potential returns per unit of risk. The NEXTDC LTD is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 890.00 in NEXTDC LTD on November 6, 2024 and sell it today you would lose (30.00) from holding NEXTDC LTD or give up 3.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSSC Offshore Marine vs. NEXTDC LTD
Performance |
| Timeline |
| CSSC Offshore Marine |
| NEXTDC LTD |
CSSC Offshore and NEXTDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSSC Offshore and NEXTDC
The main advantage of trading using opposite CSSC Offshore and NEXTDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSSC Offshore position performs unexpectedly, NEXTDC 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 NEXTDC will offset losses from the drop in NEXTDC's long position.| CSSC Offshore vs. ALBIS LEASING AG | CSSC Offshore vs. Synovus Financial Corp | CSSC Offshore vs. Chesapeake Utilities | CSSC Offshore vs. Lendlease Group |
| NEXTDC vs. Delta Air Lines | NEXTDC vs. Norwegian Air Shuttle | NEXTDC vs. SINGAPORE AIRLINES | NEXTDC vs. Gol Intelligent Airlines |
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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