Correlation Between CSSC Offshore and Arrow Electronics

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

Diversification Opportunities for CSSC Offshore and Arrow Electronics

0.38

Correlation Coefficient

CSSC Offshore  Arrow Electronics

Weak diversification

The 3 months correlation between CSSC and Arrow is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and Arrow Electronics go up and down completely randomly.

Pair Corralation between CSSC Offshore and Arrow Electronics

Assuming the 90 days trading horizon CSSC Offshore Marine is expected to generate 1.55 times more return on investment than Arrow Electronics. However, CSSC Offshore is 1.55 times more volatile than Arrow Electronics. It trades about 0.16 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.1 per unit of risk. If you would invest  125.00  in CSSC Offshore Marine on September 25, 2024 and sell it today you would earn a total of  10.00  from holding CSSC Offshore Marine or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CSSC Offshore Marine  vs.  Arrow Electronics

CSSC Offshore Marine

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSSC Offshore Marine are ranked lower than 1 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Arrow Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Arrow Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CSSC Offshore and Arrow Electronics

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

The idea behind CSSC Offshore Marine and Arrow Electronics 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.