Correlation Between Citic Offshore and Jiaozuo Wanfang

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

By analyzing existing cross correlation between Citic Offshore Helicopter and Jiaozuo Wanfang Aluminum, you can compare the effects of market volatilities on Citic Offshore and Jiaozuo Wanfang 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 Citic Offshore with a short position of Jiaozuo Wanfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Offshore and Jiaozuo Wanfang.

Diversification Opportunities for Citic Offshore and Jiaozuo Wanfang

0.27

Correlation Coefficient

Citic Offshore  Jiaozuo Wanfang

Modest diversification

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

Pair Corralation between Citic Offshore and Jiaozuo Wanfang

Assuming the 90 days trading horizon Citic Offshore Helicopter is expected to under-perform the Jiaozuo Wanfang. In addition to that, Citic Offshore is 1.92 times more volatile than Jiaozuo Wanfang Aluminum. It trades about -0.22 of its total potential returns per unit of risk. Jiaozuo Wanfang Aluminum is currently generating about -0.09 per unit of volatility. If you would invest  679.00  in Jiaozuo Wanfang Aluminum on October 6, 2024 and sell it today you would lose (25.00) from holding Jiaozuo Wanfang Aluminum or give up 3.68% of portfolio value over 90 days.

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

Citic Offshore Helicopter  vs.  Jiaozuo Wanfang Aluminum

Citic Offshore Helicopter

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Offshore Helicopter are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Citic Offshore sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiaozuo Wanfang Aluminum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiaozuo Wanfang Aluminum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Citic Offshore and Jiaozuo Wanfang

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

The idea behind Citic Offshore Helicopter and Jiaozuo Wanfang Aluminum 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.