Correlation Between CITIC Securities and Anhui Jinhe

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

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

Diversification Opportunities for CITIC Securities and Anhui Jinhe

0.1

Correlation Coefficient

CITIC Securities  Anhui Jinhe

Average diversification

The 3 months correlation between CITIC and Anhui is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Securities Co and Anhui Jinhe Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Jinhe Industrial and CITIC Securities 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 Securities Co are associated (or correlated) with Anhui Jinhe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Jinhe Industrial has no effect on the direction of CITIC Securities i.e., CITIC Securities and Anhui Jinhe go up and down completely randomly.

Pair Corralation between CITIC Securities and Anhui Jinhe

Assuming the 90 days trading horizon CITIC Securities Co is expected to under-perform the Anhui Jinhe. But the stock apears to be less risky and, when comparing its historical volatility, CITIC Securities Co is 1.03 times less risky than Anhui Jinhe. The stock trades about -0.11 of its potential returns per unit of risk. The Anhui Jinhe Industrial is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,389  in Anhui Jinhe Industrial on December 4, 2024 and sell it today you would lose (119.00) from holding Anhui Jinhe Industrial or give up 4.98% of portfolio value over 90 days.

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

CITIC Securities Co  vs.  Anhui Jinhe Industrial

CITIC Securities

Risk-Adjusted Performance

Very Weak

Over the last 90 days CITIC Securities Co 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.

Anhui Jinhe Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anhui Jinhe Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Anhui Jinhe 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 Securities and Anhui Jinhe

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

The idea behind CITIC Securities Co and Anhui Jinhe Industrial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.