Correlation Between Alpine 4 and Citic

Can any of the company-specific risk be diversified away by investing in both Alpine 4 and 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 Alpine 4 and Citic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpine 4 Holdings and Citic Ltd ADR, you can compare the effects of market volatilities on Alpine 4 and 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 Alpine 4 with a short position of Citic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpine 4 and Citic.

Diversification Opportunities for Alpine 4 and Citic

0.0

Correlation Coefficient

Alpine 4  Citic

Pay attention - limited upside

The 3 months correlation between Alpine and Citic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alpine 4 Holdings and Citic Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Ltd ADR and Alpine 4 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 Alpine 4 Holdings are associated (or correlated) with Citic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Ltd ADR has no effect on the direction of Alpine 4 i.e., Alpine 4 and Citic go up and down completely randomly.

Pair Corralation between Alpine 4 and Citic

If you would invest (100.00) in Alpine 4 Holdings on December 2, 2024 and sell it today you would earn a total of  100.00  from holding Alpine 4 Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alpine 4 Holdings  vs.  Citic Ltd ADR

Alpine 4 Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpine 4 Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Alpine 4 is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Citic Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citic Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Citic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpine 4 and Citic

The main advantage of trading using opposite Alpine 4 and Citic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpine 4 position performs unexpectedly, 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 Citic will offset losses from the drop in Citic's long position.

The idea behind Alpine 4 Holdings and Citic Ltd ADR 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.