Correlation Between CSSC Offshore and NISSAN CHEMICAL
Can any of the company-specific risk be diversified away by investing in both CSSC Offshore and NISSAN CHEMICAL 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 NISSAN CHEMICAL 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 NISSAN CHEMICAL IND, you can compare the effects of market volatilities on CSSC Offshore and NISSAN CHEMICAL 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 NISSAN CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSSC Offshore and NISSAN CHEMICAL.
Diversification Opportunities for CSSC Offshore and NISSAN CHEMICAL
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CSSC and NISSAN is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and NISSAN CHEMICAL IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSAN CHEMICAL IND 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 NISSAN CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSAN CHEMICAL IND has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and NISSAN CHEMICAL go up and down completely randomly.
Pair Corralation between CSSC Offshore and NISSAN CHEMICAL
Assuming the 90 days trading horizon CSSC Offshore Marine is expected to under-perform the NISSAN CHEMICAL. In addition to that, CSSC Offshore is 3.39 times more volatile than NISSAN CHEMICAL IND. It trades about -0.13 of its total potential returns per unit of risk. NISSAN CHEMICAL IND is currently generating about 0.14 per unit of volatility. If you would invest 3,160 in NISSAN CHEMICAL IND on August 29, 2024 and sell it today you would earn a total of 180.00 from holding NISSAN CHEMICAL IND or generate 5.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSSC Offshore Marine vs. NISSAN CHEMICAL IND
Performance |
| Timeline |
| CSSC Offshore Marine |
| NISSAN CHEMICAL IND |
CSSC Offshore and NISSAN CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSSC Offshore and NISSAN CHEMICAL
The main advantage of trading using opposite CSSC Offshore and NISSAN CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSSC Offshore position performs unexpectedly, NISSAN CHEMICAL 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 NISSAN CHEMICAL will offset losses from the drop in NISSAN CHEMICAL's long position.| CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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