Correlation Between Kunwu Jiuding and China Citic

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Can any of the company-specific risk be diversified away by investing in both Kunwu Jiuding and China Citic 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 Kunwu Jiuding and China Citic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kunwu Jiuding Investment and China Citic Bank, you can compare the effects of market volatilities on Kunwu Jiuding 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 Kunwu Jiuding with a short position of China Citic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kunwu Jiuding and China Citic.

Diversification Opportunities for Kunwu Jiuding and China Citic

KunwuChinaDiversified AwayKunwuChinaDiversified Away100%
0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Kunwu and China is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kunwu Jiuding Investment 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 Kunwu Jiuding 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 Kunwu Jiuding Investment 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 Kunwu Jiuding i.e., Kunwu Jiuding and China Citic go up and down completely randomly.

Pair Corralation between Kunwu Jiuding and China Citic

Assuming the 90 days trading horizon Kunwu Jiuding Investment is expected to under-perform the China Citic. In addition to that, Kunwu Jiuding is 1.57 times more volatile than China Citic Bank. It trades about -0.55 of its total potential returns per unit of risk. China Citic Bank is currently generating about -0.12 per unit of volatility. If you would invest  705.00  in China Citic Bank on October 6, 2024 and sell it today you would lose (26.00) from holding China Citic Bank or give up 3.69% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Kunwu Jiuding Investment  vs.  China Citic Bank

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -505101520
JavaScript chart by amCharts 3.21.15600053 601998
       Timeline  
Kunwu Jiuding Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kunwu Jiuding Investment 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan131415161718
China Citic Bank 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days China Citic Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Citic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan6.56.66.76.86.977.17.2

Kunwu Jiuding and China Citic Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.23-4.67-3.1-1.54-0.02491.472.964.455.94 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.15600053 601998
       Returns  

Pair Trading with Kunwu Jiuding and China Citic

The main advantage of trading using opposite Kunwu Jiuding and China Citic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kunwu Jiuding 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.
The idea behind Kunwu Jiuding Investment and China Citic Bank 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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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