Correlation Between China Citic and Zhejiang Publishing

Can any of the company-specific risk be diversified away by investing in both China Citic and Zhejiang Publishing 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 Zhejiang Publishing 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 Zhejiang Publishing Media, you can compare the effects of market volatilities on China Citic and Zhejiang Publishing 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 Zhejiang Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Citic and Zhejiang Publishing.

Diversification Opportunities for China Citic and Zhejiang Publishing

0.26

Correlation Coefficient

China Citic  Zhejiang Publishing

Modest diversification

The 3 months correlation between China and Zhejiang is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding China Citic Bank and Zhejiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Publishing Media 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 Zhejiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Publishing Media has no effect on the direction of China Citic i.e., China Citic and Zhejiang Publishing go up and down completely randomly.

Pair Corralation between China Citic and Zhejiang Publishing

Assuming the 90 days trading horizon China Citic Bank is expected to generate 0.63 times more return on investment than Zhejiang Publishing. However, China Citic Bank is 1.59 times less risky than Zhejiang Publishing. It trades about -0.01 of its potential returns per unit of risk. Zhejiang Publishing Media is currently generating about -0.09 per unit of risk. If you would invest  677.00  in China Citic Bank on October 22, 2024 and sell it today you would lose (11.00) from holding China Citic Bank or give up 1.62% of portfolio value over 90 days.

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

China Citic Bank  vs.  Zhejiang Publishing Media

China Citic Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Citic Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Citic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zhejiang Publishing Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Publishing Media 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.

Pair Trading with China Citic and Zhejiang Publishing

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

The idea behind China Citic Bank and Zhejiang Publishing Media 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.