Correlation Between CSSC Offshore and NORTHEAST UTILITIES
Can any of the company-specific risk be diversified away by investing in both CSSC Offshore and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES 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 NORTHEAST UTILITIES, you can compare the effects of market volatilities on CSSC Offshore and NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSSC Offshore and NORTHEAST UTILITIES.
Diversification Opportunities for CSSC Offshore and NORTHEAST UTILITIES
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CSSC and NORTHEAST is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES 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 NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and NORTHEAST UTILITIES go up and down completely randomly.
Pair Corralation between CSSC Offshore and NORTHEAST UTILITIES
Assuming the 90 days trading horizon CSSC Offshore Marine is expected to under-perform the NORTHEAST UTILITIES. In addition to that, CSSC Offshore is 1.91 times more volatile than NORTHEAST UTILITIES. It trades about -0.25 of its total potential returns per unit of risk. NORTHEAST UTILITIES is currently generating about -0.04 per unit of volatility. If you would invest 6,150 in NORTHEAST UTILITIES on August 29, 2024 and sell it today you would lose (100.00) from holding NORTHEAST UTILITIES or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CSSC Offshore Marine vs. NORTHEAST UTILITIES
Performance |
| Timeline |
| CSSC Offshore Marine |
| NORTHEAST UTILITIES |
CSSC Offshore and NORTHEAST UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSSC Offshore and NORTHEAST UTILITIES
The main advantage of trading using opposite CSSC Offshore and NORTHEAST UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSSC Offshore position performs unexpectedly, NORTHEAST UTILITIES 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 NORTHEAST UTILITIES will offset losses from the drop in NORTHEAST UTILITIES's long position.| CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc |
| NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Apple Inc | NORTHEAST UTILITIES vs. Superior Plus Corp | NORTHEAST UTILITIES vs. SIVERS SEMICONDUCTORS AB |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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