Correlation Between Cambricon Technologies and Citic Guoan

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

By analyzing existing cross correlation between Cambricon Technologies Corp and Citic Guoan Wine, you can compare the effects of market volatilities on Cambricon Technologies and Citic Guoan 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 Cambricon Technologies with a short position of Citic Guoan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambricon Technologies and Citic Guoan.

Diversification Opportunities for Cambricon Technologies and Citic Guoan

0.43

Correlation Coefficient

Cambricon Technologies  Citic Guoan

Very weak diversification

The 3 months correlation between Cambricon and Citic is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cambricon Technologies Corp and Citic Guoan Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Guoan Wine and Cambricon Technologies 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 Cambricon Technologies Corp are associated (or correlated) with Citic Guoan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Guoan Wine has no effect on the direction of Cambricon Technologies i.e., Cambricon Technologies and Citic Guoan go up and down completely randomly.

Pair Corralation between Cambricon Technologies and Citic Guoan

Assuming the 90 days trading horizon Cambricon Technologies Corp is expected to generate 1.68 times more return on investment than Citic Guoan. However, Cambricon Technologies is 1.68 times more volatile than Citic Guoan Wine. It trades about 0.13 of its potential returns per unit of risk. Citic Guoan Wine is currently generating about -0.03 per unit of risk. If you would invest  12,700  in Cambricon Technologies Corp on October 5, 2024 and sell it today you would earn a total of  51,862  from holding Cambricon Technologies Corp or generate 408.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.67%
Values	Daily Returns

Cambricon Technologies Corp  vs.  Citic Guoan Wine

Cambricon Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cambricon Technologies Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cambricon Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Citic Guoan Wine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citic Guoan Wine 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 Cambricon Technologies and Citic Guoan

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

The idea behind Cambricon Technologies Corp and Citic Guoan Wine 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.