Correlation Between Citic Guoan and Taiji Computer

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

By analyzing existing cross correlation between Citic Guoan Wine and Taiji Computer Corp, you can compare the effects of market volatilities on Citic Guoan and Taiji Computer 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 Guoan with a short position of Taiji Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Guoan and Taiji Computer.

Diversification Opportunities for Citic Guoan and Taiji Computer

0.84

Correlation Coefficient

Citic Guoan  Taiji Computer

Very poor diversification

The 3 months correlation between Citic and Taiji is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and Taiji Computer Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiji Computer Corp and Citic Guoan 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 Guoan Wine are associated (or correlated) with Taiji Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiji Computer Corp has no effect on the direction of Citic Guoan i.e., Citic Guoan and Taiji Computer go up and down completely randomly.

Pair Corralation between Citic Guoan and Taiji Computer

Assuming the 90 days trading horizon Citic Guoan Wine is expected to generate 0.73 times more return on investment than Taiji Computer. However, Citic Guoan Wine is 1.37 times less risky than Taiji Computer. It trades about -0.02 of its potential returns per unit of risk. Taiji Computer Corp is currently generating about -0.02 per unit of risk. If you would invest  706.00  in Citic Guoan Wine on October 13, 2024 and sell it today you would lose (214.00) from holding Citic Guoan Wine or give up 30.31% of portfolio value over 90 days.

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

Citic Guoan Wine  vs.  Taiji Computer Corp

Citic Guoan Wine

Risk-Adjusted Performance

0 of 100

Very Weak

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

Taiji Computer Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiji Computer Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Taiji Computer 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 Guoan and Taiji Computer

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

The idea behind Citic Guoan Wine and Taiji Computer Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.