Correlation Between Bitcoin and CITIC Securities

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

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

Diversification Opportunities for Bitcoin and CITIC Securities

0.45

Correlation Coefficient

Bitcoin  CITIC Securities

Very weak diversification

The 3 months correlation between Bitcoin and CITIC is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and CITIC Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Securities and Bitcoin 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 Bitcoin are associated (or correlated) with CITIC Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Securities has no effect on the direction of Bitcoin i.e., Bitcoin and CITIC Securities go up and down completely randomly.

Pair Corralation between Bitcoin and CITIC Securities

Assuming the 90 days trading horizon Bitcoin is expected to generate 0.83 times more return on investment than CITIC Securities. However, Bitcoin is 1.2 times less risky than CITIC Securities. It trades about 0.02 of its potential returns per unit of risk. CITIC Securities is currently generating about -0.18 per unit of risk. If you would invest  9,665,788  in Bitcoin on October 10, 2024 and sell it today you would earn a total of  34,549  from holding Bitcoin or generate 0.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

Bitcoin  vs.  CITIC Securities

Bitcoin

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

CITIC Securities

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Securities are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITIC Securities reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitcoin and CITIC Securities

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

The idea behind Bitcoin and CITIC Securities 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.