Correlation Between Citic and Windrock Land

Can any of the company-specific risk be diversified away by investing in both Citic and Windrock Land 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 Windrock Land 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 Windrock Land Co, you can compare the effects of market volatilities on Citic and Windrock Land 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 Windrock Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic and Windrock Land.

Diversification Opportunities for Citic and Windrock Land

0.21

Correlation Coefficient

Citic  Windrock Land

Modest diversification

The 3 months correlation between Citic and Windrock is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citic Ltd ADR and Windrock Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Windrock Land 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 Windrock Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Windrock Land has no effect on the direction of Citic i.e., Citic and Windrock Land go up and down completely randomly.

Pair Corralation between Citic and Windrock Land

Assuming the 90 days horizon Citic is expected to generate 1.55 times less return on investment than Windrock Land. But when comparing it to its historical volatility, Citic Ltd ADR is 1.03 times less risky than Windrock Land. It trades about 0.03 of its potential returns per unit of risk. Windrock Land Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  43,818  in Windrock Land Co on December 29, 2024 and sell it today you would earn a total of  3,182  from holding Windrock Land Co or generate 7.26% return on investment over 90 days.

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

Citic Ltd ADR  vs.  Windrock Land Co

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.

Windrock Land

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Windrock Land Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Windrock Land may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citic and Windrock Land

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

The idea behind Citic Ltd ADR and Windrock Land Co 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..