Correlation Between Southwest Airlines and CSSC Offshore
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and CSSC 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 Southwest Airlines and CSSC Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines Co and CSSC Offshore Marine, you can compare the effects of market volatilities on Southwest Airlines and CSSC 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 Southwest Airlines with a short position of CSSC Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and CSSC Offshore.
Diversification Opportunities for Southwest Airlines and CSSC Offshore
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Southwest and CSSC is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and CSSC Offshore Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSSC Offshore Marine and Southwest Airlines 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 Southwest Airlines Co are associated (or correlated) with CSSC Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSSC Offshore Marine has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and CSSC Offshore go up and down completely randomly.
Pair Corralation between Southwest Airlines and CSSC Offshore
Assuming the 90 days horizon Southwest Airlines Co is expected to generate 0.56 times more return on investment than CSSC Offshore. However, Southwest Airlines Co is 1.78 times less risky than CSSC Offshore. It trades about 0.2 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about -0.12 per unit of risk. If you would invest 2,639 in Southwest Airlines Co on August 30, 2024 and sell it today you would earn a total of 440.00 from holding Southwest Airlines Co or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines Co vs. CSSC Offshore Marine
Performance |
| Timeline |
| Southwest Airlines |
| CSSC Offshore Marine |
Southwest Airlines and CSSC Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and CSSC Offshore
The main advantage of trading using opposite Southwest Airlines and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, CSSC 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 CSSC Offshore will offset losses from the drop in CSSC Offshore's long position.| Southwest Airlines vs. Ryanair Holdings plc | Southwest Airlines vs. Superior Plus Corp | Southwest Airlines vs. NMI Holdings | Southwest Airlines vs. Origin Agritech |
| CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc | CSSC Offshore vs. Apple Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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