Correlation Between Citic Offshore and Yes Optoelectronics

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

Diversification Opportunities for Citic Offshore and Yes Optoelectronics

0.48

Correlation Coefficient

Citic Offshore  Yes Optoelectronics

Very weak diversification

The 3 months correlation between Citic and Yes is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citic Offshore Helicopter and Yes Optoelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yes Optoelectronics 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 Yes Optoelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yes Optoelectronics has no effect on the direction of Citic Offshore i.e., Citic Offshore and Yes Optoelectronics go up and down completely randomly.

Pair Corralation between Citic Offshore and Yes Optoelectronics

Assuming the 90 days trading horizon Citic Offshore Helicopter is expected to under-perform the Yes Optoelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Citic Offshore Helicopter is 1.08 times less risky than Yes Optoelectronics. The stock trades about -0.14 of its potential returns per unit of risk. The Yes Optoelectronics Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,667  in Yes Optoelectronics Co on October 5, 2024 and sell it today you would lose (107.00) from holding Yes Optoelectronics Co or give up 4.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Citic Offshore Helicopter  vs.  Yes Optoelectronics Co

Citic Offshore Helicopter

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Offshore Helicopter are ranked lower than 6 (%) 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.

Yes Optoelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yes Optoelectronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yes Optoelectronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citic Offshore and Yes Optoelectronics

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

The idea behind Citic Offshore Helicopter and Yes Optoelectronics Co 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.