Correlation Between CHINA SOUTHN and CSSC Offshore

Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN 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 CHINA SOUTHN and CSSC Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHINA SOUTHN AIR H and CSSC Offshore Marine, you can compare the effects of market volatilities on CHINA SOUTHN 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 CHINA SOUTHN with a short position of CSSC Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and CSSC Offshore.

Diversification Opportunities for CHINA SOUTHN and CSSC Offshore

0.49

Correlation Coefficient

CHINA SOUTHN  CSSC Offshore

Very weak diversification

The 3 months correlation between CHINA and CSSC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H 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 CHINA SOUTHN 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 CHINA SOUTHN AIR H 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 CHINA SOUTHN i.e., CHINA SOUTHN and CSSC Offshore go up and down completely randomly.

Pair Corralation between CHINA SOUTHN and CSSC Offshore

Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to generate 22.18 times more return on investment than CSSC Offshore. However, CHINA SOUTHN is 22.18 times more volatile than CSSC Offshore Marine. It trades about 0.05 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about 0.13 per unit of risk. If you would invest  37.00  in CHINA SOUTHN AIR H on April 22, 2025 and sell it today you would earn a total of  2.00  from holding CHINA SOUTHN AIR H or generate 5.41% return on investment over 90 days.

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

CHINA SOUTHN AIR H   vs.  CSSC Offshore Marine

CHINA SOUTHN AIR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA SOUTHN AIR H are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CHINA SOUTHN may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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.

Pair Trading with CHINA SOUTHN and CSSC Offshore

The main advantage of trading using opposite CHINA SOUTHN and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SOUTHN 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.

The idea behind CHINA SOUTHN AIR H and CSSC Offshore Marine 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..