Correlation Between Citic Guoan and Wintao Communications

Can any of the company-specific risk be diversified away by investing in both Citic Guoan and Wintao Communications 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 Wintao Communications 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 Wintao Communications Co, you can compare the effects of market volatilities on Citic Guoan and Wintao Communications 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 Wintao Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Guoan and Wintao Communications.

Diversification Opportunities for Citic Guoan and Wintao Communications

0.79

Correlation Coefficient

Citic Guoan  Wintao Communications

Poor diversification

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

Pair Corralation between Citic Guoan and Wintao Communications

Assuming the 90 days trading horizon Citic Guoan Wine is expected to under-perform the Wintao Communications. But the stock apears to be less risky and, when comparing its historical volatility, Citic Guoan Wine is 1.01 times less risky than Wintao Communications. The stock trades about -0.02 of its potential returns per unit of risk. The Wintao Communications Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,311  in Wintao Communications Co on October 14, 2024 and sell it today you would lose (300.00) from holding Wintao Communications Co or give up 12.98% of portfolio value over 90 days.

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

Citic Guoan Wine  vs.  Wintao Communications Co

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.

Wintao Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wintao Communications 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.

Pair Trading with Citic Guoan and Wintao Communications

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

The idea behind Citic Guoan Wine and Wintao Communications Co 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.