Correlation Between CITIC Guoan and Guizhou BroadcastingTV

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

Diversification Opportunities for CITIC Guoan and Guizhou BroadcastingTV

0.91

Correlation Coefficient

CITIC Guoan  Guizhou BroadcastingTV

Almost no diversification

The 3 months correlation between CITIC and Guizhou is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Guoan Information and Guizhou BroadcastingTV Info in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guizhou BroadcastingTV 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 Guizhou BroadcastingTV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guizhou BroadcastingTV has no effect on the direction of CITIC Guoan i.e., CITIC Guoan and Guizhou BroadcastingTV go up and down completely randomly.

Pair Corralation between CITIC Guoan and Guizhou BroadcastingTV

Assuming the 90 days trading horizon CITIC Guoan is expected to generate 5.88 times less return on investment than Guizhou BroadcastingTV. But when comparing it to its historical volatility, CITIC Guoan Information is 1.21 times less risky than Guizhou BroadcastingTV. It trades about 0.03 of its potential returns per unit of risk. Guizhou BroadcastingTV Info is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  821.00  in Guizhou BroadcastingTV Info on December 2, 2024 and sell it today you would earn a total of  127.00  from holding Guizhou BroadcastingTV Info or generate 15.47% return on investment over 90 days.

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

CITIC Guoan Information  vs.  Guizhou BroadcastingTV 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.

Guizhou BroadcastingTV

Risk-Adjusted Performance

Very Weak

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

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

The idea behind CITIC Guoan Information and Guizhou BroadcastingTV 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.