Correlation Between Citic Guoan and Jiangsu Phoenix

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

Diversification Opportunities for Citic Guoan and Jiangsu Phoenix

-0.25

Correlation Coefficient

Citic Guoan  Jiangsu Phoenix

Very good diversification

The 3 months correlation between Citic and Jiangsu is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and Jiangsu Phoenix Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Phoenix Publ 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 Jiangsu Phoenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Phoenix Publ has no effect on the direction of Citic Guoan i.e., Citic Guoan and Jiangsu Phoenix go up and down completely randomly.

Pair Corralation between Citic Guoan and Jiangsu Phoenix

Assuming the 90 days trading horizon Citic Guoan Wine is expected to under-perform the Jiangsu Phoenix. In addition to that, Citic Guoan is 1.42 times more volatile than Jiangsu Phoenix Publishing. It trades about -0.11 of its total potential returns per unit of risk. Jiangsu Phoenix Publishing is currently generating about 0.18 per unit of volatility. If you would invest  1,032  in Jiangsu Phoenix Publishing on September 25, 2024 and sell it today you would earn a total of  70.00  from holding Jiangsu Phoenix Publishing or generate 6.78% 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.  Jiangsu Phoenix Publishing

Citic Guoan Wine

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Guoan Wine are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Citic Guoan sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiangsu Phoenix Publ

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Phoenix Publishing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jiangsu Phoenix 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 Jiangsu Phoenix

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

The idea behind Citic Guoan Wine and Jiangsu Phoenix Publishing 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.