Correlation Between CSSC Offshore and Coca-Cola European

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

Diversification Opportunities for CSSC Offshore and Coca-Cola European

-0.74

Correlation Coefficient

CSSC Offshore  Coca-Cola European

Pay attention - limited upside

The 3 months correlation between CSSC and Coca-Cola is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine and Coca Cola European Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola European 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 Coca-Cola European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola European has no effect on the direction of CSSC Offshore i.e., CSSC Offshore and Coca-Cola European go up and down completely randomly.

Pair Corralation between CSSC Offshore and Coca-Cola European

Assuming the 90 days trading horizon CSSC Offshore is expected to generate 3.54 times less return on investment than Coca-Cola European. In addition to that, CSSC Offshore is 1.81 times more volatile than Coca Cola European Partners. It trades about 0.01 of its total potential returns per unit of risk. Coca Cola European Partners is currently generating about 0.05 per unit of volatility. If you would invest  6,979  in Coca Cola European Partners on September 26, 2024 and sell it today you would earn a total of  351.00  from holding Coca Cola European Partners or generate 5.03% return on investment over 90 days.

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

CSSC Offshore Marine  vs.  Coca Cola European Partners

CSSC Offshore Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSSC Offshore Marine has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Coca Cola European

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola European Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Coca-Cola European 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 Coca-Cola European

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

The idea behind CSSC Offshore Marine and Coca Cola European Partners 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.