Correlation Between CITIC Guoan and Fujian Nanwang

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

Diversification Opportunities for CITIC Guoan and Fujian Nanwang

-0.17

Correlation Coefficient

CITIC Guoan  Fujian Nanwang

Good diversification

The 3 months correlation between CITIC and Fujian is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Guoan Information and Fujian Nanwang Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Nanwang Envir 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 Fujian Nanwang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Nanwang Envir has no effect on the direction of CITIC Guoan i.e., CITIC Guoan and Fujian Nanwang go up and down completely randomly.

Pair Corralation between CITIC Guoan and Fujian Nanwang

Assuming the 90 days trading horizon CITIC Guoan Information is expected to under-perform the Fujian Nanwang. In addition to that, CITIC Guoan is 1.62 times more volatile than Fujian Nanwang Environment. It trades about -0.03 of its total potential returns per unit of risk. Fujian Nanwang Environment is currently generating about 0.04 per unit of volatility. If you would invest  1,111  in Fujian Nanwang Environment on October 25, 2024 and sell it today you would earn a total of  42.00  from holding Fujian Nanwang Environment or generate 3.78% return on investment over 90 days.

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

CITIC Guoan Information  vs.  Fujian Nanwang Environment

CITIC Guoan Information

Risk-Adjusted Performance

0 of 100

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 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.

Fujian Nanwang Envir

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Nanwang Environment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fujian Nanwang 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 Fujian Nanwang

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

The idea behind CITIC Guoan Information and Fujian Nanwang Environment 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.