Correlation Between CSSC Offshore and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both CSSC Offshore and Rio Tinto 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 Rio Tinto 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 Rio Tinto Group, you can compare the effects of market volatilities on CSSC Offshore and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSSC Offshore and Rio Tinto.
Diversification Opportunities for CSSC Offshore and Rio Tinto
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between CSSC and Rio is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and Rio Tinto Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto Group has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and Rio Tinto go up and down completely randomly.
Pair Corralation between CSSC Offshore and Rio Tinto
Assuming the 90 days trading horizon CSSC Offshore Marine is expected to generate 1.85 times more return on investment than Rio Tinto. However, CSSC Offshore is 1.85 times more volatile than Rio Tinto Group. It trades about 0.04 of its potential returns per unit of risk. Rio Tinto Group is currently generating about 0.03 per unit of risk. If you would invest 87.00 in CSSC Offshore Marine on September 2, 2024 and sell it today you would earn a total of 37.00 from holding CSSC Offshore Marine or generate 42.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSSC Offshore Marine vs. Rio Tinto Group
Performance |
| Timeline |
| CSSC Offshore Marine |
| Rio Tinto Group |
CSSC Offshore and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSSC Offshore and Rio Tinto
The main advantage of trading using opposite CSSC Offshore and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSSC Offshore position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| CSSC Offshore vs. Rogers Communications | CSSC Offshore vs. Computer And Technologies | CSSC Offshore vs. T MOBILE US | CSSC Offshore vs. Micron Technology |
| Rio Tinto vs. AGRICULTBK HADR25 YC | Rio Tinto vs. Sterling Construction | Rio Tinto vs. ETFS Coffee ETC | Rio Tinto vs. Daito Trust Construction |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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