Correlation Between CSSC Offshore and Chesapeake Utilities

Can any of the company-specific risk be diversified away by investing in both CSSC Offshore and Chesapeake 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 Chesapeake 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 Chesapeake Utilities, you can compare the effects of market volatilities on CSSC Offshore and Chesapeake 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSSC Offshore and Chesapeake Utilities.

Diversification Opportunities for CSSC Offshore and Chesapeake Utilities

-0.68

Correlation Coefficient

CSSC Offshore  Chesapeake Utilities

Excellent diversification

The 3 months correlation between CSSC and Chesapeake is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and Chesapeake Utilities go up and down completely randomly.

Pair Corralation between CSSC Offshore and Chesapeake Utilities

Assuming the 90 days trading horizon CSSC Offshore Marine is expected to generate 0.07 times more return on investment than Chesapeake Utilities. However, CSSC Offshore Marine is 15.27 times less risky than Chesapeake Utilities. It trades about 0.13 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about -0.1 per unit of risk. If you would invest  121.00  in CSSC Offshore Marine on April 21, 2025 and sell it today you would earn a total of  1.00  from holding CSSC Offshore Marine or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

CSSC Offshore Marine  vs.  Chesapeake Utilities

CSSC Offshore Marine

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CSSC Offshore Marine are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CSSC Offshore is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Chesapeake Utilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chesapeake Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CSSC Offshore and Chesapeake Utilities

The main advantage of trading using opposite CSSC Offshore and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSSC Offshore position performs unexpectedly, Chesapeake 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.

The idea behind CSSC Offshore Marine and Chesapeake Utilities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.