Correlation Between YLZ Information and CITIC Guoan

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

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

Diversification Opportunities for YLZ Information and CITIC Guoan

0.83

Correlation Coefficient

YLZ Information  CITIC Guoan

Very poor diversification

The 3 months correlation between YLZ and CITIC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding YLZ Information Tech and CITIC Guoan Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Guoan Information and YLZ Information 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 YLZ Information Tech are associated (or correlated) with CITIC Guoan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Guoan Information has no effect on the direction of YLZ Information i.e., YLZ Information and CITIC Guoan go up and down completely randomly.

Pair Corralation between YLZ Information and CITIC Guoan

Assuming the 90 days trading horizon YLZ Information Tech is expected to generate 0.83 times more return on investment than CITIC Guoan. However, YLZ Information Tech is 1.21 times less risky than CITIC Guoan. It trades about 0.22 of its potential returns per unit of risk. CITIC Guoan Information is currently generating about 0.09 per unit of risk. If you would invest  343.00  in YLZ Information Tech on September 23, 2024 and sell it today you would earn a total of  32.00  from holding YLZ Information Tech or generate 9.33% return on investment over 90 days.

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

YLZ Information Tech  vs.  CITIC Guoan Information

YLZ Information Tech

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YLZ Information Tech are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YLZ Information sustained solid returns over the last few months and may actually be approaching a breakup point.

CITIC Guoan Information

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Guoan Information are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CITIC Guoan sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YLZ Information and CITIC Guoan

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

The idea behind YLZ Information Tech and CITIC Guoan 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.