Correlation Between CITIC Metal and ZYF Lopsking

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

Diversification Opportunities for CITIC Metal and ZYF Lopsking

0.71

Correlation Coefficient

CITIC Metal  ZYF Lopsking

Poor diversification

The 3 months correlation between CITIC and ZYF is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and ZYF Lopsking Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZYF Lopsking Aluminum 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 ZYF Lopsking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZYF Lopsking Aluminum has no effect on the direction of CITIC Metal i.e., CITIC Metal and ZYF Lopsking go up and down completely randomly.

Pair Corralation between CITIC Metal and ZYF Lopsking

Assuming the 90 days trading horizon CITIC Metal is expected to generate 1.35 times less return on investment than ZYF Lopsking. But when comparing it to its historical volatility, CITIC Metal Co is 1.24 times less risky than ZYF Lopsking. It trades about 0.05 of its potential returns per unit of risk. ZYF Lopsking Aluminum is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  500.00  in ZYF Lopsking Aluminum on September 24, 2024 and sell it today you would earn a total of  30.00  from holding ZYF Lopsking Aluminum or generate 6.0% return on investment over 90 days.

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

CITIC Metal Co  vs.  ZYF Lopsking Aluminum

CITIC Metal

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Metal Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CITIC Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ZYF Lopsking Aluminum

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ZYF Lopsking Aluminum are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ZYF Lopsking may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CITIC Metal and ZYF Lopsking

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

The idea behind CITIC Metal Co and ZYF Lopsking Aluminum 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.