Correlation Between CITIC Metal and Harbin Hatou

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

Diversification Opportunities for CITIC Metal and Harbin Hatou

0.55

Correlation Coefficient

CITIC Metal  Harbin Hatou

Very weak diversification

The 3 months correlation between CITIC and Harbin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and Harbin Hatou Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbin Hatou Investment 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 Harbin Hatou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbin Hatou Investment has no effect on the direction of CITIC Metal i.e., CITIC Metal and Harbin Hatou go up and down completely randomly.

Pair Corralation between CITIC Metal and Harbin Hatou

Assuming the 90 days trading horizon CITIC Metal Co is expected to generate 0.48 times more return on investment than Harbin Hatou. However, CITIC Metal Co is 2.08 times less risky than Harbin Hatou. It trades about 0.08 of its potential returns per unit of risk. Harbin Hatou Investment is currently generating about -0.13 per unit of risk. If you would invest  749.00  in CITIC Metal Co on December 25, 2024 and sell it today you would earn a total of  35.00  from holding CITIC Metal Co or generate 4.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

CITIC Metal Co  vs.  Harbin Hatou Investment

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 6 (%) 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.

Harbin Hatou Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harbin Hatou Investment 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CITIC Metal and Harbin Hatou

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

The idea behind CITIC Metal Co and Harbin Hatou Investment 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.