Correlation Between Guilin Seamild and CITIC Metal

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

By analyzing existing cross correlation between Guilin Seamild Foods and CITIC Metal Co, you can compare the effects of market volatilities on Guilin Seamild and CITIC Metal 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 Guilin Seamild with a short position of CITIC Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guilin Seamild and CITIC Metal.

Diversification Opportunities for Guilin Seamild and CITIC Metal

0.31

Correlation Coefficient

Guilin Seamild  CITIC Metal

Weak diversification

The 3 months correlation between Guilin and CITIC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Guilin Seamild Foods and CITIC Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Metal and Guilin Seamild 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 Guilin Seamild Foods are associated (or correlated) with CITIC Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Metal has no effect on the direction of Guilin Seamild i.e., Guilin Seamild and CITIC Metal go up and down completely randomly.

Pair Corralation between Guilin Seamild and CITIC Metal

Assuming the 90 days trading horizon Guilin Seamild Foods is expected to generate 3.23 times more return on investment than CITIC Metal. However, Guilin Seamild is 3.23 times more volatile than CITIC Metal Co. It trades about 0.22 of its potential returns per unit of risk. CITIC Metal Co is currently generating about -0.1 per unit of risk. If you would invest  1,414  in Guilin Seamild Foods on September 27, 2024 and sell it today you would earn a total of  257.00  from holding Guilin Seamild Foods or generate 18.18% return on investment over 90 days.

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

Guilin Seamild Foods  vs.  CITIC Metal Co

Guilin Seamild Foods

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guilin Seamild Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guilin Seamild sustained solid returns over the last few months and may actually be approaching a breakup point.

CITIC Metal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Guilin Seamild and CITIC Metal

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

The idea behind Guilin Seamild Foods and CITIC Metal 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.