Correlation Between CITIC Metal and Double Medical

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

Diversification Opportunities for CITIC Metal and Double Medical

-0.16

Correlation Coefficient

CITIC Metal  Double Medical

Good diversification

The 3 months correlation between CITIC and Double is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and Double Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Double Medical Technology 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 Double Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Double Medical Technology has no effect on the direction of CITIC Metal i.e., CITIC Metal and Double Medical go up and down completely randomly.

Pair Corralation between CITIC Metal and Double Medical

Assuming the 90 days trading horizon CITIC Metal is expected to generate 1.82 times less return on investment than Double Medical. But when comparing it to its historical volatility, CITIC Metal Co is 2.01 times less risky than Double Medical. It trades about 0.04 of its potential returns per unit of risk. Double Medical Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,135  in Double Medical Technology on December 25, 2024 and sell it today you would earn a total of  88.00  from holding Double Medical Technology or generate 2.81% return on investment over 90 days.

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

CITIC Metal Co  vs.  Double Medical Technology

CITIC Metal

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Metal Co are ranked lower than 2 (%) 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.

Double Medical Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Double Medical Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Double Medical 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 Double Medical

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

The idea behind CITIC Metal Co and Double Medical Technology 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.