Correlation Between Rising Nonferrous and Citic Offshore

Can any of the company-specific risk be diversified away by investing in both Rising Nonferrous and Citic Offshore 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 Rising Nonferrous and Citic Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rising Nonferrous Metals and Citic Offshore Helicopter, you can compare the effects of market volatilities on Rising Nonferrous and Citic Offshore 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 Rising Nonferrous with a short position of Citic Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rising Nonferrous and Citic Offshore.

Diversification Opportunities for Rising Nonferrous and Citic Offshore

0.66

Correlation Coefficient

Rising Nonferrous  Citic Offshore

Poor diversification

The 3 months correlation between Rising and Citic is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Rising Nonferrous Metals and Citic Offshore Helicopter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Offshore Helicopter and Rising Nonferrous 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 Rising Nonferrous Metals are associated (or correlated) with Citic Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Offshore Helicopter has no effect on the direction of Rising Nonferrous i.e., Rising Nonferrous and Citic Offshore go up and down completely randomly.

Pair Corralation between Rising Nonferrous and Citic Offshore

Assuming the 90 days trading horizon Rising Nonferrous Metals is expected to under-perform the Citic Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Rising Nonferrous Metals is 2.29 times less risky than Citic Offshore. The stock trades about -0.26 of its potential returns per unit of risk. The Citic Offshore Helicopter is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,730  in Citic Offshore Helicopter on October 6, 2024 and sell it today you would lose (448.00) from holding Citic Offshore Helicopter or give up 16.41% of portfolio value over 90 days.

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

Rising Nonferrous Metals  vs.  Citic Offshore Helicopter

Rising Nonferrous Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rising Nonferrous Metals 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.

Citic Offshore Helicopter

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Offshore Helicopter are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Citic Offshore sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rising Nonferrous and Citic Offshore

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

The idea behind Rising Nonferrous Metals and Citic Offshore Helicopter 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.