Correlation Between Citic Guoan and UCloud Technology

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

Diversification Opportunities for Citic Guoan and UCloud Technology

0.69

Correlation Coefficient

Citic Guoan  UCloud Technology

Poor diversification

The 3 months correlation between Citic and UCloud is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and UCloud Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UCloud Technology 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 UCloud Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UCloud Technology has no effect on the direction of Citic Guoan i.e., Citic Guoan and UCloud Technology go up and down completely randomly.

Pair Corralation between Citic Guoan and UCloud Technology

Assuming the 90 days trading horizon Citic Guoan Wine is expected to under-perform the UCloud Technology. But the stock apears to be less risky and, when comparing its historical volatility, Citic Guoan Wine is 1.2 times less risky than UCloud Technology. The stock trades about -0.04 of its potential returns per unit of risk. The UCloud Technology Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,795  in UCloud Technology Co on October 3, 2024 and sell it today you would lose (397.00) from holding UCloud Technology Co or give up 22.12% 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.  UCloud Technology 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.

UCloud Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UCloud Technology 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 UCloud Technology

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

The idea behind Citic Guoan Wine and UCloud Technology 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.