Correlation Between Citic Guoan and Anhui Deli

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Citic Guoan and Anhui Deli 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 Anhui Deli 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 Anhui Deli Household, you can compare the effects of market volatilities on Citic Guoan and Anhui Deli 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 Anhui Deli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Guoan and Anhui Deli.

Diversification Opportunities for Citic Guoan and Anhui Deli

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Citic and Anhui is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and Anhui Deli Household in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Deli Household 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 Anhui Deli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Deli Household has no effect on the direction of Citic Guoan i.e., Citic Guoan and Anhui Deli go up and down completely randomly.

Pair Corralation between Citic Guoan and Anhui Deli

Assuming the 90 days trading horizon Citic Guoan Wine is expected to generate 0.83 times more return on investment than Anhui Deli. However, Citic Guoan Wine is 1.2 times less risky than Anhui Deli. It trades about -0.01 of its potential returns per unit of risk. Anhui Deli Household is currently generating about -0.02 per unit of risk. If you would invest  683.00  in Citic Guoan Wine on October 9, 2024 and sell it today you would lose (191.00) from holding Citic Guoan Wine or give up 27.96% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Citic Guoan Wine  vs.  Anhui Deli Household

 Performance 
       Timeline  
Citic Guoan Wine 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Anhui Deli Household 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Anhui Deli Household 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.

Citic Guoan and Anhui Deli Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citic Guoan and Anhui Deli

The main advantage of trading using opposite Citic Guoan and Anhui Deli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Guoan position performs unexpectedly, Anhui Deli 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 Deli will offset losses from the drop in Anhui Deli's long position.
The idea behind Citic Guoan Wine and Anhui Deli Household 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.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

Other Complementary Tools

Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance