Correlation Between CI GAMES and Chuangs China

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

By analyzing existing cross correlation between CI GAMES SA and Chuangs China Investments, you can compare the effects of market volatilities on CI GAMES and Chuangs China 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 CI GAMES with a short position of Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI GAMES and Chuangs China.

Diversification Opportunities for CI GAMES and Chuangs China

-0.06

Correlation Coefficient

CI GAMES  Chuangs China

Good diversification

The 3 months correlation between CI7 and Chuangs is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding CI GAMES SA and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments and CI GAMES 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 CI GAMES SA are associated (or correlated) with Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of CI GAMES i.e., CI GAMES and Chuangs China go up and down completely randomly.

Pair Corralation between CI GAMES and Chuangs China

Assuming the 90 days horizon CI GAMES SA is expected to under-perform the Chuangs China. But the stock apears to be less risky and, when comparing its historical volatility, CI GAMES SA is 1.33 times less risky than Chuangs China. The stock trades about -0.02 of its potential returns per unit of risk. The Chuangs China Investments is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1.45  in Chuangs China Investments on September 14, 2024 and sell it today you would lose (0.45) from holding Chuangs China Investments or give up 31.03% of portfolio value over 90 days.

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

CI GAMES SA  vs.  Chuangs China Investments

CI GAMES SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI GAMES SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Chuangs China Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chuangs China Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Chuangs China is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CI GAMES and Chuangs China

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

The idea behind CI GAMES SA and Chuangs China Investments 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.