Correlation Between CITIC and Lincoln Educational

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

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

Diversification Opportunities for CITIC and Lincoln Educational

-0.35

Correlation Coefficient

CITIC  Lincoln Educational

Very good diversification

The 3 months correlation between CITIC and Lincoln is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational 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 Lincoln Educational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Educational has no effect on the direction of CITIC i.e., CITIC and Lincoln Educational go up and down completely randomly.

Pair Corralation between CITIC and Lincoln Educational

Assuming the 90 days horizon CITIC Limited is expected to generate 0.83 times more return on investment than Lincoln Educational. However, CITIC Limited is 1.21 times less risky than Lincoln Educational. It trades about 0.06 of its potential returns per unit of risk. Lincoln Educational Services is currently generating about 0.02 per unit of risk. If you would invest  111.00  in CITIC Limited on December 20, 2024 and sell it today you would earn a total of  9.00  from holding CITIC Limited or generate 8.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.22%
Values	Daily Returns

CITIC Limited  vs.  Lincoln Educational Services

CITIC Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, CITIC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Lincoln Educational

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Lincoln Educational is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CITIC and Lincoln Educational

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

The idea behind CITIC Limited and Lincoln Educational Services 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.