Correlation Between DR and China Citic
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By analyzing existing cross correlation between DR Limited and China Citic Bank, you can compare the effects of market volatilities on DR and China Citic 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 DR with a short position of China Citic. Check out your portfolio center. Please also check ongoing floating volatility patterns of DR and China Citic.
Diversification Opportunities for DR and China Citic
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DR and China is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding DR Limited and China Citic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Citic Bank and DR 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 DR Limited are associated (or correlated) with China Citic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Citic Bank has no effect on the direction of DR i.e., DR and China Citic go up and down completely randomly.
Pair Corralation between DR and China Citic
Assuming the 90 days trading horizon DR Limited is expected to generate 2.5 times more return on investment than China Citic. However, DR is 2.5 times more volatile than China Citic Bank. It trades about 0.12 of its potential returns per unit of risk. China Citic Bank is currently generating about 0.02 per unit of risk. If you would invest 2,317 in DR Limited on December 30, 2024 and sell it today you would earn a total of 524.00 from holding DR Limited or generate 22.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
DR Limited vs. China Citic Bank
Performance |
Timeline |
DR Limited |
China Citic Bank |
DR and China Citic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DR and China Citic
The main advantage of trading using opposite DR and China Citic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DR position performs unexpectedly, China Citic 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 China Citic will offset losses from the drop in China Citic's long position.DR vs. Anhui Huaheng Biotechnology | DR vs. Jiangsu GDK Biotechnology | DR vs. Sichuan Hebang Biotechnology | DR vs. Yunnan Copper Co |
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Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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