Correlation Between CITIC Metal and Heren Health

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

Diversification Opportunities for CITIC Metal and Heren Health

0.3

Correlation Coefficient

CITIC Metal  Heren Health

Weak diversification

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

Pair Corralation between CITIC Metal and Heren Health

Assuming the 90 days trading horizon CITIC Metal is expected to generate 2.33 times less return on investment than Heren Health. But when comparing it to its historical volatility, CITIC Metal Co is 5.62 times less risky than Heren Health. It trades about 0.02 of its potential returns per unit of risk. Heren Health Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,440  in Heren Health Co on December 2, 2024 and sell it today you would lose (28.00) from holding Heren Health Co or give up 1.94% of portfolio value over 90 days.

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

CITIC Metal Co  vs.  Heren Health Co

CITIC Metal

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Heren Health

Risk-Adjusted Performance

Very Weak

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

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

The idea behind CITIC Metal Co and Heren Health 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.