Correlation Between China Citic and Sino Platinum

Can any of the company-specific risk be diversified away by investing in both China Citic and Sino Platinum 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 China Citic and Sino Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Citic Bank and Sino Platinum Metals Co, you can compare the effects of market volatilities on China Citic and Sino Platinum 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 China Citic with a short position of Sino Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Citic and Sino Platinum.

Diversification Opportunities for China Citic and Sino Platinum

0.83

Correlation Coefficient

China Citic  Sino Platinum

Very poor diversification

The 3 months correlation between China and Sino is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding China Citic Bank and Sino Platinum Metals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Platinum Metals and China Citic 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 China Citic Bank are associated (or correlated) with Sino Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Platinum Metals has no effect on the direction of China Citic i.e., China Citic and Sino Platinum go up and down completely randomly.

Pair Corralation between China Citic and Sino Platinum

Assuming the 90 days trading horizon China Citic Bank is expected to generate 0.91 times more return on investment than Sino Platinum. However, China Citic Bank is 1.1 times less risky than Sino Platinum. It trades about 0.2 of its potential returns per unit of risk. Sino Platinum Metals Co is currently generating about 0.14 per unit of risk. If you would invest  580.00  in China Citic Bank on September 12, 2024 and sell it today you would earn a total of  151.00  from holding China Citic Bank or generate 26.03% return on investment over 90 days.

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

China Citic Bank  vs.  Sino Platinum Metals Co

China Citic Bank

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Citic Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Citic sustained solid returns over the last few months and may actually be approaching a breakup point.

Sino Platinum Metals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Platinum Metals Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sino Platinum sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Citic and Sino Platinum

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

The idea behind China Citic Bank and Sino Platinum Metals 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.