Correlation Between Citic and Rjd Green

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

By analyzing existing cross correlation between Citic Ltd ADR and Rjd Green, you can compare the effects of market volatilities on Citic and Rjd Green 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 Rjd Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic and Rjd Green.

Diversification Opportunities for Citic and Rjd Green

-0.45

Correlation Coefficient

Citic  Rjd Green

Very good diversification

The 3 months correlation between Citic and Rjd is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Citic Ltd ADR and Rjd Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rjd Green 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 Ltd ADR are associated (or correlated) with Rjd Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rjd Green has no effect on the direction of Citic i.e., Citic and Rjd Green go up and down completely randomly.

Pair Corralation between Citic and Rjd Green

Assuming the 90 days horizon Citic is expected to generate 2.09 times less return on investment than Rjd Green. But when comparing it to its historical volatility, Citic Ltd ADR is 2.83 times less risky than Rjd Green. It trades about 0.03 of its potential returns per unit of risk. Rjd Green is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.68  in Rjd Green on December 27, 2024 and sell it today you would lose (0.06) from holding Rjd Green or give up 8.82% of portfolio value over 90 days.

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

Citic Ltd ADR  vs.  Rjd Green

Citic Ltd ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Ltd ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Citic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Rjd Green

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rjd Green are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Rjd Green reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citic and Rjd Green

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

The idea behind Citic Ltd ADR and Rjd Green 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.