Correlation Between Citic Guoan and Aluminum Corp

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

Diversification Opportunities for Citic Guoan and Aluminum Corp

-0.21

Correlation Coefficient

Citic Guoan  Aluminum Corp

Very good diversification

The 3 months correlation between Citic and Aluminum is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and Aluminum Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum 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 Aluminum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum Corp has no effect on the direction of Citic Guoan i.e., Citic Guoan and Aluminum Corp go up and down completely randomly.

Pair Corralation between Citic Guoan and Aluminum Corp

Assuming the 90 days trading horizon Citic Guoan Wine is expected to under-perform the Aluminum Corp. In addition to that, Citic Guoan is 1.09 times more volatile than Aluminum Corp of. It trades about -0.01 of its total potential returns per unit of risk. Aluminum Corp of is currently generating about 0.05 per unit of volatility. If you would invest  484.00  in Aluminum Corp of on October 4, 2024 and sell it today you would earn a total of  251.00  from holding Aluminum Corp of or generate 51.86% return on investment over 90 days.

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

Citic Guoan Wine  vs.  Aluminum Corp of

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 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.

Aluminum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum Corp of 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.

Pair Trading with Citic Guoan and Aluminum Corp

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

The idea behind Citic Guoan Wine and Aluminum Corp of 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.