Correlation Between Citic Guoan and Inly Media

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

Diversification Opportunities for Citic Guoan and Inly Media

0.47

Correlation Coefficient

Citic Guoan  Inly Media

Very weak diversification

The 3 months correlation between Citic and Inly is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and Inly Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inly Media 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 Inly Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inly Media has no effect on the direction of Citic Guoan i.e., Citic Guoan and Inly Media go up and down completely randomly.

Pair Corralation between Citic Guoan and Inly Media

Assuming the 90 days trading horizon Citic Guoan Wine is expected to under-perform the Inly Media. But the stock apears to be less risky and, when comparing its historical volatility, Citic Guoan Wine is 2.33 times less risky than Inly Media. The stock trades about -0.33 of its potential returns per unit of risk. The Inly Media Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,661  in Inly Media Co on October 6, 2024 and sell it today you would lose (69.00) from holding Inly Media Co or give up 4.15% of portfolio value over 90 days.

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

Citic Guoan Wine  vs.  Inly Media 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 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.

Inly Media

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inly Media Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inly Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citic Guoan and Inly Media

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

The idea behind Citic Guoan Wine and Inly Media 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.