Correlation Between China Citic and Shanghai V

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

Diversification Opportunities for China Citic and Shanghai V

-0.14

Correlation Coefficient

China Citic  Shanghai V

Good diversification

The 3 months correlation between China and Shanghai is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding China Citic Bank and Shanghai V Test Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai V Test 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 Shanghai V. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai V Test has no effect on the direction of China Citic i.e., China Citic and Shanghai V go up and down completely randomly.

Pair Corralation between China Citic and Shanghai V

Assuming the 90 days trading horizon China Citic Bank is expected to generate 0.52 times more return on investment than Shanghai V. However, China Citic Bank is 1.92 times less risky than Shanghai V. It trades about -0.12 of its potential returns per unit of risk. Shanghai V Test Semiconductor is currently generating about -0.2 per unit of risk. If you would invest  705.00  in China Citic Bank on October 6, 2024 and sell it today you would lose (26.00) from holding China Citic Bank or give up 3.69% of portfolio value over 90 days.

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

China Citic Bank  vs.  Shanghai V Test Semiconductor

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.

Shanghai V Test

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai V Test Semiconductor 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 Shanghai V

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

The idea behind China Citic Bank and Shanghai V Test Semiconductor 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.