Correlation Between CITIC Guoan and Wonders Information

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

Diversification Opportunities for CITIC Guoan and Wonders Information

0.72

Correlation Coefficient

CITIC Guoan  Wonders Information

Poor diversification

The 3 months correlation between CITIC and Wonders is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Guoan Information and Wonders Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonders Information 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 Wonders Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonders Information has no effect on the direction of CITIC Guoan i.e., CITIC Guoan and Wonders Information go up and down completely randomly.

Pair Corralation between CITIC Guoan and Wonders Information

Assuming the 90 days trading horizon CITIC Guoan Information is expected to under-perform the Wonders Information. But the stock apears to be less risky and, when comparing its historical volatility, CITIC Guoan Information is 1.65 times less risky than Wonders Information. The stock trades about -0.04 of its potential returns per unit of risk. The Wonders Information is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  804.00  in Wonders Information on December 25, 2024 and sell it today you would earn a total of  23.00  from holding Wonders Information or generate 2.86% return on investment over 90 days.

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

CITIC Guoan Information  vs.  Wonders Information

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 somewhat strong basic indicators, CITIC Guoan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wonders Information

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wonders Information are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wonders Information may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CITIC Guoan and Wonders Information

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

The idea behind CITIC Guoan Information and Wonders Information 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .