Correlation Between CITIC Metal and Sailun Jinyu

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

Diversification Opportunities for CITIC Metal and Sailun Jinyu

0.7

Correlation Coefficient

CITIC Metal  Sailun Jinyu

Poor diversification

The 3 months correlation between CITIC and Sailun is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and Sailun Jinyu Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sailun Jinyu Group 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 Sailun Jinyu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sailun Jinyu Group has no effect on the direction of CITIC Metal i.e., CITIC Metal and Sailun Jinyu go up and down completely randomly.

Pair Corralation between CITIC Metal and Sailun Jinyu

Assuming the 90 days trading horizon CITIC Metal Co is expected to under-perform the Sailun Jinyu. In addition to that, CITIC Metal is 1.22 times more volatile than Sailun Jinyu Group. It trades about -0.02 of its total potential returns per unit of risk. Sailun Jinyu Group is currently generating about 0.05 per unit of volatility. If you would invest  970.00  in Sailun Jinyu Group on September 21, 2024 and sell it today you would earn a total of  442.00  from holding Sailun Jinyu Group or generate 45.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	86.58%
Values	Daily Returns

CITIC Metal Co  vs.  Sailun Jinyu Group

CITIC Metal

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Metal Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CITIC Metal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sailun Jinyu Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sailun Jinyu Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sailun Jinyu 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 Sailun Jinyu

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

The idea behind CITIC Metal Co and Sailun Jinyu Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.