Correlation Between Guotai Epoint and Citic Offshore

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

By analyzing existing cross correlation between Guotai Epoint Software and Citic Offshore Helicopter, you can compare the effects of market volatilities on Guotai Epoint and Citic Offshore 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 Guotai Epoint with a short position of Citic Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guotai Epoint and Citic Offshore.

Diversification Opportunities for Guotai Epoint and Citic Offshore

-0.03

Correlation Coefficient

Guotai Epoint  Citic Offshore

Good diversification

The 3 months correlation between Guotai and Citic is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Guotai Epoint Software and Citic Offshore Helicopter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Offshore Helicopter and Guotai Epoint 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 Guotai Epoint Software are associated (or correlated) with Citic Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Offshore Helicopter has no effect on the direction of Guotai Epoint i.e., Guotai Epoint and Citic Offshore go up and down completely randomly.

Pair Corralation between Guotai Epoint and Citic Offshore

Assuming the 90 days trading horizon Guotai Epoint Software is expected to under-perform the Citic Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Guotai Epoint Software is 2.03 times less risky than Citic Offshore. The stock trades about -0.62 of its potential returns per unit of risk. The Citic Offshore Helicopter is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest  2,711  in Citic Offshore Helicopter on October 11, 2024 and sell it today you would lose (465.00) from holding Citic Offshore Helicopter or give up 17.15% of portfolio value over 90 days.

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

Guotai Epoint Software  vs.  Citic Offshore Helicopter

Guotai Epoint Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guotai Epoint Software 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Citic Offshore Helicopter

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Offshore Helicopter are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Citic Offshore sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guotai Epoint and Citic Offshore

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

The idea behind Guotai Epoint Software and Citic Offshore Helicopter 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..