Correlation Between CITIC Metal and Shenzhen Sunlord

Can any of the company-specific risk be diversified away by investing in both CITIC Metal and Shenzhen Sunlord 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 Metal and Shenzhen Sunlord into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CITIC Metal Co and Shenzhen Sunlord Electronics, you can compare the effects of market volatilities on CITIC Metal and Shenzhen Sunlord 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 Metal with a short position of Shenzhen Sunlord. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Metal and Shenzhen Sunlord.

Diversification Opportunities for CITIC Metal and Shenzhen Sunlord

0.3

Correlation Coefficient

CITIC Metal  Shenzhen Sunlord

Weak diversification

The 3 months correlation between CITIC and Shenzhen is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and Shenzhen Sunlord Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Sunlord Ele and CITIC Metal 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 Metal Co are associated (or correlated) with Shenzhen Sunlord. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Sunlord Ele has no effect on the direction of CITIC Metal i.e., CITIC Metal and Shenzhen Sunlord go up and down completely randomly.

Pair Corralation between CITIC Metal and Shenzhen Sunlord

Assuming the 90 days trading horizon CITIC Metal is expected to generate 111.67 times less return on investment than Shenzhen Sunlord. But when comparing it to its historical volatility, CITIC Metal Co is 1.0 times less risky than Shenzhen Sunlord. It trades about 0.0 of its potential returns per unit of risk. Shenzhen Sunlord Electronics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,893  in Shenzhen Sunlord Electronics on October 5, 2024 and sell it today you would earn a total of  69.00  from holding Shenzhen Sunlord Electronics or generate 2.39% return on investment over 90 days.

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

CITIC Metal Co  vs.  Shenzhen Sunlord Electronics

CITIC Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC Metal Co 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.

Shenzhen Sunlord Ele

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Shenzhen Sunlord Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shenzhen Sunlord 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 Metal and Shenzhen Sunlord

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

The idea behind CITIC Metal Co and Shenzhen Sunlord Electronics 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.