Correlation Between Glencore PLC and CITIC RESHLDGS

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

By analyzing existing cross correlation between Glencore PLC and CITIC RESHLDGS HD, you can compare the effects of market volatilities on Glencore PLC and CITIC RESHLDGS 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 Glencore PLC with a short position of CITIC RESHLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and CITIC RESHLDGS.

Diversification Opportunities for Glencore PLC and CITIC RESHLDGS

0.84

Correlation Coefficient

Glencore PLC  CITIC RESHLDGS

Very poor diversification

The 3 months correlation between Glencore and CITIC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and CITIC RESHLDGS HD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC RESHLDGS HD and Glencore PLC 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 Glencore PLC are associated (or correlated) with CITIC RESHLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC RESHLDGS HD has no effect on the direction of Glencore PLC i.e., Glencore PLC and CITIC RESHLDGS go up and down completely randomly.

Pair Corralation between Glencore PLC and CITIC RESHLDGS

Assuming the 90 days horizon Glencore PLC is expected to under-perform the CITIC RESHLDGS. But the stock apears to be less risky and, when comparing its historical volatility, Glencore PLC is 1.75 times less risky than CITIC RESHLDGS. The stock trades about -0.37 of its potential returns per unit of risk. The CITIC RESHLDGS HD is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  4.05  in CITIC RESHLDGS HD on October 10, 2024 and sell it today you would lose (0.30) from holding CITIC RESHLDGS HD or give up 7.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.44%
Values	Daily Returns

Glencore PLC  vs.  CITIC RESHLDGS HD

Glencore PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CITIC RESHLDGS HD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC RESHLDGS HD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Glencore PLC and CITIC RESHLDGS

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

The idea behind Glencore PLC and CITIC RESHLDGS HD 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.