Correlation Between CITIC and Teijin

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

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

Diversification Opportunities for CITIC and Teijin

-0.76

Correlation Coefficient

CITIC  Teijin

Pay attention - limited upside

The 3 months correlation between CITIC and Teijin is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and Teijin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teijin 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 Teijin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teijin has no effect on the direction of CITIC i.e., CITIC and Teijin go up and down completely randomly.

Pair Corralation between CITIC and Teijin

Assuming the 90 days horizon CITIC Limited is expected to under-perform the Teijin. In addition to that, CITIC is 10.6 times more volatile than Teijin. It trades about -0.22 of its total potential returns per unit of risk. Teijin is currently generating about 0.0 per unit of volatility. If you would invest  850.00  in Teijin on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Teijin or generate 0.0% return on investment over 90 days.

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

CITIC Limited  vs.  Teijin

CITIC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days CITIC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Teijin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teijin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Teijin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CITIC and Teijin

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

The idea behind CITIC Limited and Teijin 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.