Correlation Between CITIC Guoan and Hithink RoyalFlush

Can any of the company-specific risk be diversified away by investing in both CITIC Guoan and Hithink RoyalFlush 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 Guoan and Hithink RoyalFlush into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CITIC Guoan Information and Hithink RoyalFlush Info, you can compare the effects of market volatilities on CITIC Guoan and Hithink RoyalFlush 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 Guoan with a short position of Hithink RoyalFlush. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Guoan and Hithink RoyalFlush.

Diversification Opportunities for CITIC Guoan and Hithink RoyalFlush

0.74

Correlation Coefficient

CITIC Guoan  Hithink RoyalFlush

Poor diversification

The 3 months correlation between CITIC and Hithink is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Guoan Information and Hithink RoyalFlush Info in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hithink RoyalFlush Info and CITIC Guoan 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 Guoan Information are associated (or correlated) with Hithink RoyalFlush. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hithink RoyalFlush Info has no effect on the direction of CITIC Guoan i.e., CITIC Guoan and Hithink RoyalFlush go up and down completely randomly.

Pair Corralation between CITIC Guoan and Hithink RoyalFlush

Assuming the 90 days trading horizon CITIC Guoan Information is expected to under-perform the Hithink RoyalFlush. But the stock apears to be less risky and, when comparing its historical volatility, CITIC Guoan Information is 1.28 times less risky than Hithink RoyalFlush. The stock trades about -0.1 of its potential returns per unit of risk. The Hithink RoyalFlush Info is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  32,694  in Hithink RoyalFlush Info on December 2, 2024 and sell it today you would lose (2,578) from holding Hithink RoyalFlush Info or give up 7.89% of portfolio value over 90 days.

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

CITIC Guoan Information  vs.  Hithink RoyalFlush Info

CITIC Guoan Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days CITIC Guoan Information has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hithink RoyalFlush Info

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hithink RoyalFlush Info has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hithink RoyalFlush 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 Guoan and Hithink RoyalFlush

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

The idea behind CITIC Guoan Information and Hithink RoyalFlush Info 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.