Correlation Between NOVAGOLD RESOURCES and CSSC Offshore

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

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

Diversification Opportunities for NOVAGOLD RESOURCES and CSSC Offshore

0.48

Correlation Coefficient

NOVAGOLD RESOURCES  CSSC Offshore

Very weak diversification

The 3 months correlation between NOVAGOLD and CSSC is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES i.e., NOVAGOLD RESOURCES and CSSC Offshore go up and down completely randomly.

Pair Corralation between NOVAGOLD RESOURCES and CSSC Offshore

Assuming the 90 days trading horizon NOVAGOLD RESOURCES is expected to under-perform the CSSC Offshore. But the stock apears to be less risky and, when comparing its historical volatility, NOVAGOLD RESOURCES is 1.0 times less risky than CSSC Offshore. The stock trades about -0.02 of its potential returns per unit of risk. The CSSC Offshore Marine is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  66.00  in CSSC Offshore Marine on February 23, 2024 and sell it today you would earn a total of  106.00  from holding CSSC Offshore Marine or generate 160.61% return on investment over 90 days.

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

NOVAGOLD RESOURCES  vs.  CSSC Offshore Marine

NOVAGOLD RESOURCES

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NOVAGOLD RESOURCES are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, NOVAGOLD RESOURCES exhibited solid returns over the last few months and may actually be approaching a breakup point.

CSSC Offshore Marine

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSSC Offshore Marine are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CSSC Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NOVAGOLD RESOURCES and CSSC Offshore

The main advantage of trading using opposite NOVAGOLD RESOURCES and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVAGOLD RESOURCES 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 NOVAGOLD RESOURCES 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.