Correlation Between CSSC Offshore and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both CSSC Offshore and SBM 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 CSSC Offshore and SBM OFFSHORE 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 SBM OFFSHORE, you can compare the effects of market volatilities on CSSC Offshore and SBM 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 CSSC Offshore with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSSC Offshore and SBM OFFSHORE.
Diversification Opportunities for CSSC Offshore and SBM OFFSHORE
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CSSC and SBM is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE 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 SBM OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM OFFSHORE has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between CSSC Offshore and SBM OFFSHORE
Assuming the 90 days trading horizon CSSC Offshore Marine is expected to under-perform the SBM OFFSHORE. In addition to that, CSSC Offshore is 1.52 times more volatile than SBM OFFSHORE. It trades about -0.26 of its total potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.07 per unit of volatility. If you would invest 1,691 in SBM OFFSHORE on August 29, 2024 and sell it today you would earn a total of 41.00 from holding SBM OFFSHORE or generate 2.42% 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. SBM OFFSHORE
Performance |
| Timeline |
| CSSC Offshore Marine |
| SBM OFFSHORE |
CSSC Offshore and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSSC Offshore and SBM OFFSHORE
The main advantage of trading using opposite CSSC Offshore and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSSC Offshore position performs unexpectedly, SBM 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 SBM OFFSHORE will offset losses from the drop in SBM OFFSHORE's long position.| CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc |
| SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Apple Inc | SBM OFFSHORE vs. Microsoft | SBM OFFSHORE vs. Microsoft |
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 Stocks Directory module to find actively traded stocks across global markets.
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