Correlation Between Circuit Fabology and China Citic

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

By analyzing existing cross correlation between Circuit Fabology Microelectronics and China Citic Bank, you can compare the effects of market volatilities on Circuit Fabology and China Citic 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 Circuit Fabology with a short position of China Citic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Circuit Fabology and China Citic.

Diversification Opportunities for Circuit Fabology and China Citic

-0.02

Correlation Coefficient

Circuit Fabology  China Citic

Good diversification

The 3 months correlation between Circuit and China is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Circuit Fabology Microelectron and China Citic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Citic Bank and Circuit Fabology 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 Circuit Fabology Microelectronics are associated (or correlated) with China Citic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Citic Bank has no effect on the direction of Circuit Fabology i.e., Circuit Fabology and China Citic go up and down completely randomly.

Pair Corralation between Circuit Fabology and China Citic

Assuming the 90 days trading horizon Circuit Fabology Microelectronics is expected to under-perform the China Citic. In addition to that, Circuit Fabology is 1.79 times more volatile than China Citic Bank. It trades about -0.01 of its total potential returns per unit of risk. China Citic Bank is currently generating about 0.05 per unit of volatility. If you would invest  486.00  in China Citic Bank on October 5, 2024 and sell it today you would earn a total of  192.00  from holding China Citic Bank or generate 39.51% return on investment over 90 days.

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

Circuit Fabology Microelectron  vs.  China Citic Bank

Circuit Fabology Mic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Circuit Fabology Microelectronics 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.

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.

Pair Trading with Circuit Fabology and China Citic

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

The idea behind Circuit Fabology Microelectronics and China Citic Bank 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.