Correlation Between CITIC and Grupo Carso

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

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

Diversification Opportunities for CITIC and Grupo Carso

-0.05

Correlation Coefficient

CITIC  Grupo Carso

Good diversification

The 3 months correlation between CITIC and Grupo is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB and CITIC 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 Limited are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of CITIC i.e., CITIC and Grupo Carso go up and down completely randomly.

Pair Corralation between CITIC and Grupo Carso

Assuming the 90 days horizon CITIC is expected to generate 1.23 times less return on investment than Grupo Carso. In addition to that, CITIC is 1.17 times more volatile than Grupo Carso SAB. It trades about 0.02 of its total potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.03 per unit of volatility. If you would invest  520.00  in Grupo Carso SAB on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Grupo Carso SAB or generate 1.92% return on investment over 90 days.

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

CITIC Limited  vs.  Grupo Carso SAB

CITIC Limited

Risk-Adjusted Performance

Weak

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

Grupo Carso SAB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Carso SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CITIC and Grupo Carso

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

The idea behind CITIC Limited and Grupo Carso SAB 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.