Correlation Between CITIC SECURITIES-H- and CITIC (CPFSG)

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

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

Diversification Opportunities for CITIC SECURITIES-H- and CITIC (CPFSG)

-0.4

Correlation Coefficient

CITIC SECURITIES-H-  CITIC (CPFSG)

Very good diversification

The 3 months correlation between CITIC and CITIC is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CITIC SECURITIES H and CITIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC (CPFSG) and CITIC SECURITIES-H- 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 H are associated (or correlated) with CITIC (CPFSG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC (CPFSG) has no effect on the direction of CITIC SECURITIES-H- i.e., CITIC SECURITIES-H- and CITIC (CPFSG) go up and down completely randomly.

Pair Corralation between CITIC SECURITIES-H- and CITIC (CPFSG)

Assuming the 90 days trading horizon CITIC SECURITIES-H- is expected to generate 1.76 times less return on investment than CITIC (CPFSG). But when comparing it to its historical volatility, CITIC SECURITIES H is 1.36 times less risky than CITIC (CPFSG). It trades about 0.07 of its potential returns per unit of risk. CITIC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  14.00  in CITIC on October 23, 2024 and sell it today you would earn a total of  89.00  from holding CITIC or generate 635.71% return on investment over 90 days.

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

CITIC SECURITIES H   vs.  CITIC

CITIC SECURITIES-H-

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC SECURITIES H are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, CITIC SECURITIES-H- unveiled solid returns over the last few months and may actually be approaching a breakup point.

CITIC (CPFSG)

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CITIC (CPFSG) is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CITIC SECURITIES-H- and CITIC (CPFSG)

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

The idea behind CITIC SECURITIES H and CITIC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.