Correlation Between CSSC Offshore and LG Electronics
Can any of the company-specific risk be diversified away by investing in both CSSC Offshore and LG Electronics 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 LG Electronics 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 LG Electronics, you can compare the effects of market volatilities on CSSC Offshore and LG Electronics 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 LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSSC Offshore and LG Electronics.
Diversification Opportunities for CSSC Offshore and LG Electronics
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CSSC and LGLG is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and LG Electronics go up and down completely randomly.
Pair Corralation between CSSC Offshore and LG Electronics
Assuming the 90 days trading horizon CSSC Offshore Marine is expected to generate 0.55 times more return on investment than LG Electronics. However, CSSC Offshore Marine is 1.81 times less risky than LG Electronics. It trades about -0.32 of its potential returns per unit of risk. LG Electronics is currently generating about -0.24 per unit of risk. If you would invest 131.00 in CSSC Offshore Marine on November 1, 2024 and sell it today you would lose (9.00) from holding CSSC Offshore Marine or give up 6.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSSC Offshore Marine vs. LG Electronics
Performance |
| Timeline |
| CSSC Offshore Marine |
| LG Electronics |
CSSC Offshore and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSSC Offshore and LG Electronics
The main advantage of trading using opposite CSSC Offshore and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSSC Offshore position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| CSSC Offshore vs. Cleanaway Waste Management | CSSC Offshore vs. LOANDEPOT INC A | CSSC Offshore vs. SCANSOURCE | CSSC Offshore vs. Ringmetall SE |
| LG Electronics vs. Fukuyama Transporting Co | LG Electronics vs. CVS Health | LG Electronics vs. CSSC Offshore Marine | LG Electronics vs. US Physical Therapy |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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