Correlation Between CSSC Offshore and Warner Music

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

Diversification Opportunities for CSSC Offshore and Warner Music

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between CSSC and Warner is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group 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 Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and Warner Music go up and down completely randomly.

Pair Corralation between CSSC Offshore and Warner Music

Assuming the 90 days trading horizon CSSC Offshore is expected to generate 16.13 times less return on investment than Warner Music. But when comparing it to its historical volatility, CSSC Offshore Marine is 19.28 times less risky than Warner Music. It trades about 0.13 of its potential returns per unit of risk. Warner Music Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,378  in Warner Music Group on April 21, 2025 and sell it today you would earn a total of  309.00  from holding Warner Music Group or generate 12.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

CSSC Offshore Marine  vs.  Warner Music Group

 Performance 
       Timeline  
CSSC Offshore Marine 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
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.
Warner Music Group 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Warner Music Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Warner Music reported solid returns over the last few months and may actually be approaching a breakup point.

CSSC Offshore and Warner Music Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CSSC Offshore and Warner Music

The main advantage of trading using opposite CSSC Offshore and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSSC Offshore position performs unexpectedly, Warner Music 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 Warner Music will offset losses from the drop in Warner Music's long position.
The idea behind CSSC Offshore Marine and Warner Music Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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