Correlation Between CITIC and CITIC RESHLDGS

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

By analyzing existing cross correlation between CITIC Limited and CITIC RESHLDGS HD, you can compare the effects of market volatilities on CITIC and CITIC RESHLDGS 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 CITIC RESHLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC and CITIC RESHLDGS.

Diversification Opportunities for CITIC and CITIC RESHLDGS

0.52

Correlation Coefficient

CITIC  CITIC RESHLDGS

Very weak diversification

The 3 months correlation between CITIC and CITIC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and CITIC RESHLDGS HD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC RESHLDGS HD 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 CITIC RESHLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC RESHLDGS HD has no effect on the direction of CITIC i.e., CITIC and CITIC RESHLDGS go up and down completely randomly.

Pair Corralation between CITIC and CITIC RESHLDGS

Assuming the 90 days horizon CITIC Limited is expected to generate 0.93 times more return on investment than CITIC RESHLDGS. However, CITIC Limited is 1.08 times less risky than CITIC RESHLDGS. It trades about -0.02 of its potential returns per unit of risk. CITIC RESHLDGS HD is currently generating about -0.22 per unit of risk. If you would invest  106.00  in CITIC Limited on October 8, 2024 and sell it today you would lose (1.00) from holding CITIC Limited or give up 0.94% of portfolio value over 90 days.

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

CITIC Limited  vs.  CITIC RESHLDGS HD

CITIC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC Limited 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.

CITIC RESHLDGS HD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC RESHLDGS HD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic 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 CITIC and CITIC RESHLDGS

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

The idea behind CITIC Limited and CITIC RESHLDGS HD 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.

Check out your portfolio center.

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..