Correlation Between CosmoSteel Holdings and CITIC

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

By analyzing existing cross correlation between CosmoSteel Holdings Limited and CITIC LTD ADR5, you can compare the effects of market volatilities on CosmoSteel Holdings 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 CosmoSteel Holdings with a short position of CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CosmoSteel Holdings and CITIC.

Diversification Opportunities for CosmoSteel Holdings and CITIC

0.12

Correlation Coefficient

CosmoSteel Holdings  CITIC

Average diversification

The 3 months correlation between CosmoSteel and CITIC is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CosmoSteel Holdings Limited and CITIC LTD ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC LTD ADR5 and CosmoSteel Holdings 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 CosmoSteel Holdings Limited 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 ADR5 has no effect on the direction of CosmoSteel Holdings i.e., CosmoSteel Holdings and CITIC go up and down completely randomly.

Pair Corralation between CosmoSteel Holdings and CITIC

Assuming the 90 days horizon CosmoSteel Holdings Limited is expected to under-perform the CITIC. But the stock apears to be less risky and, when comparing its historical volatility, CosmoSteel Holdings Limited is 1.02 times less risky than CITIC. The stock trades about 0.0 of its potential returns per unit of risk. The CITIC LTD ADR5 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  370.00  in CITIC LTD ADR5 on October 6, 2024 and sell it today you would earn a total of  150.00  from holding CITIC LTD ADR5 or generate 40.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

CosmoSteel Holdings Limited  vs.  CITIC LTD ADR5

CosmoSteel Holdings

Risk-Adjusted Performance

1 of 100

Weak

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

CITIC LTD ADR5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC LTD ADR5 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CosmoSteel Holdings and CITIC

The main advantage of trading using opposite CosmoSteel Holdings and CITIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CosmoSteel Holdings 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 CosmoSteel Holdings Limited and CITIC LTD ADR5 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.