Correlation Between Leaguer Shenzhen and CITIC Guoan

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

By analyzing existing cross correlation between Leaguer Shenzhen MicroElectronics and CITIC Guoan Information, you can compare the effects of market volatilities on Leaguer Shenzhen 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 Leaguer Shenzhen with a short position of CITIC Guoan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leaguer Shenzhen and CITIC Guoan.

Diversification Opportunities for Leaguer Shenzhen and CITIC Guoan

0.77

Correlation Coefficient

Leaguer Shenzhen  CITIC Guoan

Poor diversification

The 3 months correlation between Leaguer and CITIC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Leaguer Shenzhen MicroElectron and CITIC Guoan Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Guoan Information and Leaguer Shenzhen 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 Leaguer Shenzhen MicroElectronics 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 Information has no effect on the direction of Leaguer Shenzhen i.e., Leaguer Shenzhen and CITIC Guoan go up and down completely randomly.

Pair Corralation between Leaguer Shenzhen and CITIC Guoan

Assuming the 90 days trading horizon Leaguer Shenzhen MicroElectronics is expected to generate 0.82 times more return on investment than CITIC Guoan. However, Leaguer Shenzhen MicroElectronics is 1.21 times less risky than CITIC Guoan. It trades about 0.25 of its potential returns per unit of risk. CITIC Guoan Information is currently generating about 0.07 per unit of risk. If you would invest  2,517  in Leaguer Shenzhen MicroElectronics on December 4, 2024 and sell it today you would earn a total of  309.00  from holding Leaguer Shenzhen MicroElectronics or generate 12.28% return on investment over 90 days.

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

Leaguer Shenzhen MicroElectron  vs.  CITIC Guoan Information

Leaguer Shenzhen Mic

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Leaguer Shenzhen MicroElectronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Leaguer Shenzhen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CITIC Guoan Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days CITIC Guoan Information 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Leaguer Shenzhen and CITIC Guoan

The main advantage of trading using opposite Leaguer Shenzhen and CITIC Guoan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leaguer Shenzhen 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 Leaguer Shenzhen MicroElectronics and CITIC Guoan Information 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.