Correlation Between CSSC Offshore and Toll Brothers

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

Diversification Opportunities for CSSC Offshore and Toll Brothers

0.62

Correlation Coefficient

CSSC Offshore  Toll Brothers

Poor diversification

The 3 months correlation between CSSC and Toll is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and Toll Brothers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toll Brothers 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 Toll Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toll Brothers has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and Toll Brothers go up and down completely randomly.

Pair Corralation between CSSC Offshore and Toll Brothers

Assuming the 90 days trading horizon CSSC Offshore is expected to generate 28.31 times less return on investment than Toll Brothers. But when comparing it to its historical volatility, CSSC Offshore Marine is 21.52 times less risky than Toll Brothers. It trades about 0.13 of its potential returns per unit of risk. Toll Brothers is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  8,083  in Toll Brothers on April 22, 2025 and sell it today you would earn a total of  2,002  from holding Toll Brothers or generate 24.77% return on investment over 90 days.

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

CSSC Offshore Marine  vs.  Toll Brothers

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.

Toll Brothers

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Toll Brothers are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Toll Brothers reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSSC Offshore and Toll Brothers

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

The idea behind CSSC Offshore Marine and Toll Brothers 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.