Correlation Between CITIC and Jardine Matheson
Can any of the company-specific risk be diversified away by investing in both CITIC and Jardine Matheson 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 Jardine Matheson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC Limited and Jardine Matheson Holdings, you can compare the effects of market volatilities on CITIC and Jardine Matheson 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 Jardine Matheson. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC and Jardine Matheson.
Diversification Opportunities for CITIC and Jardine Matheson
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CITIC and Jardine is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and Jardine Matheson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Matheson Holdings 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 Jardine Matheson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Matheson Holdings has no effect on the direction of CITIC i.e., CITIC and Jardine Matheson go up and down completely randomly.
Pair Corralation between CITIC and Jardine Matheson
Assuming the 90 days horizon CITIC Limited is expected to generate 1.05 times more return on investment than Jardine Matheson. However, CITIC is 1.05 times more volatile than Jardine Matheson Holdings. It trades about 0.12 of its potential returns per unit of risk. Jardine Matheson Holdings is currently generating about 0.06 per unit of risk. If you would invest 111.00 in CITIC Limited on December 29, 2024 and sell it today you would earn a total of 27.00 from holding CITIC Limited or generate 24.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 91.8% |
Values | Daily Returns |
CITIC Limited vs. Jardine Matheson Holdings
Performance |
Timeline |
CITIC Limited |
Jardine Matheson Holdings |
CITIC and Jardine Matheson Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CITIC and Jardine Matheson
The main advantage of trading using opposite CITIC and Jardine Matheson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC position performs unexpectedly, Jardine Matheson 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 Jardine Matheson will offset losses from the drop in Jardine Matheson's long position.CITIC vs. Cresud SACIF y | CITIC vs. Albertsons Companies | CITIC vs. flyExclusive, | CITIC vs. Avarone Metals |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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