Correlation Between CITIC and RETAIL FOOD

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

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

Diversification Opportunities for CITIC and RETAIL FOOD

-0.53

Correlation Coefficient

CITIC  RETAIL FOOD

Excellent diversification

The 3 months correlation between CITIC and RETAIL is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and RETAIL FOOD GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RETAIL FOOD GROUP 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 RETAIL FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RETAIL FOOD GROUP has no effect on the direction of CITIC i.e., CITIC and RETAIL FOOD go up and down completely randomly.

Pair Corralation between CITIC and RETAIL FOOD

Assuming the 90 days horizon CITIC Limited is expected to generate 0.6 times more return on investment than RETAIL FOOD. However, CITIC Limited is 1.67 times less risky than RETAIL FOOD. It trades about 0.11 of its potential returns per unit of risk. RETAIL FOOD GROUP is currently generating about -0.18 per unit of risk. If you would invest  106.00  in CITIC Limited on December 20, 2024 and sell it today you would earn a total of  14.00  from holding CITIC Limited or generate 13.21% return on investment over 90 days.

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

CITIC Limited  vs.  RETAIL FOOD GROUP

CITIC Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITIC reported solid returns over the last few months and may actually be approaching a breakup point.

RETAIL FOOD GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days RETAIL FOOD GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CITIC and RETAIL FOOD

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

The idea behind CITIC Limited and RETAIL FOOD GROUP 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 Commodity Directory module to find actively traded commodities issued by global exchanges.