Correlation Between CITIC Metal and Lens Technology

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

Diversification Opportunities for CITIC Metal and Lens Technology

0.29

Correlation Coefficient

CITIC Metal  Lens Technology

Modest diversification

The 3 months correlation between CITIC and Lens is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and Lens Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lens 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 Lens Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lens Technology has no effect on the direction of CITIC Metal i.e., CITIC Metal and Lens Technology go up and down completely randomly.

Pair Corralation between CITIC Metal and Lens Technology

Assuming the 90 days trading horizon CITIC Metal is expected to generate 10.89 times less return on investment than Lens Technology. But when comparing it to its historical volatility, CITIC Metal Co is 1.25 times less risky than Lens Technology. It trades about 0.01 of its potential returns per unit of risk. Lens Technology Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,193  in Lens Technology Co on October 9, 2024 and sell it today you would earn a total of  857.00  from holding Lens Technology Co or generate 71.84% 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.  Lens Technology Co

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 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.

Lens Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lens Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lens Technology 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 Lens Technology

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

The idea behind CITIC Metal Co and Lens Technology 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.