Correlation Between CITIC Securities and Air New

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

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

Diversification Opportunities for CITIC Securities and Air New

0.06

Correlation Coefficient

CITIC Securities  Air New

Significant diversification

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

Pair Corralation between CITIC Securities and Air New

Assuming the 90 days horizon CITIC Securities is expected to generate 3.4 times less return on investment than Air New. In addition to that, CITIC Securities is 1.71 times more volatile than Air New Zealand. It trades about 0.02 of its total potential returns per unit of risk. Air New Zealand is currently generating about 0.09 per unit of volatility. If you would invest  30.00  in Air New Zealand on December 19, 2024 and sell it today you would earn a total of  3.00  from holding Air New Zealand or generate 10.0% return on investment over 90 days.

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

CITIC Securities  vs.  Air New Zealand

CITIC Securities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Securities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CITIC Securities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Air New Zealand

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air New Zealand are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Air New may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CITIC Securities and Air New

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

The idea behind CITIC Securities and Air New Zealand 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..