Correlation Between Rising Nonferrous and CITIC Securities

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

Diversification Opportunities for Rising Nonferrous and CITIC Securities

0.53

Correlation Coefficient

Rising Nonferrous  CITIC Securities

Very weak diversification

The 3 months correlation between Rising and CITIC is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Rising Nonferrous Metals and CITIC Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Securities 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 Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Securities has no effect on the direction of Rising Nonferrous i.e., Rising Nonferrous and CITIC Securities go up and down completely randomly.

Pair Corralation between Rising Nonferrous and CITIC Securities

Assuming the 90 days trading horizon Rising Nonferrous Metals is expected to generate 1.13 times more return on investment than CITIC Securities. However, Rising Nonferrous is 1.13 times more volatile than CITIC Securities Co. It trades about 0.01 of its potential returns per unit of risk. CITIC Securities Co is currently generating about 0.01 per unit of risk. If you would invest  2,954  in Rising Nonferrous Metals on October 23, 2024 and sell it today you would lose (11.00) from holding Rising Nonferrous Metals or give up 0.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Rising Nonferrous Metals  vs.  CITIC Securities Co

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 somewhat strong basic indicators, Rising Nonferrous is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CITIC Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CITIC Securities is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rising Nonferrous and CITIC Securities

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

The idea behind Rising Nonferrous Metals and CITIC Securities 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.