Correlation Between CITIC RESHLDGS and CITIC

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

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

Diversification Opportunities for CITIC RESHLDGS and CITIC

0.52

Correlation Coefficient

CITIC RESHLDGS  CITIC

Very weak diversification

The 3 months correlation between CITIC and CITIC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CITIC RESHLDGS HD and CITIC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Limited and CITIC RESHLDGS 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 RESHLDGS HD are associated (or correlated) with CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Limited has no effect on the direction of CITIC RESHLDGS i.e., CITIC RESHLDGS and CITIC go up and down completely randomly.

Pair Corralation between CITIC RESHLDGS and CITIC

Assuming the 90 days horizon CITIC RESHLDGS HD is expected to under-perform the CITIC. In addition to that, CITIC RESHLDGS is 1.08 times more volatile than CITIC Limited. It trades about -0.22 of its total potential returns per unit of risk. CITIC Limited is currently generating about -0.02 per unit of volatility. If you would invest  106.00  in CITIC Limited on October 8, 2024 and sell it today you would lose (1.00) from holding CITIC Limited or give up 0.94% of portfolio value over 90 days.

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

CITIC RESHLDGS HD  vs.  CITIC Limited

CITIC RESHLDGS HD

Risk-Adjusted Performance

0 of 100

Very Weak

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

CITIC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CITIC RESHLDGS and CITIC

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

The idea behind CITIC RESHLDGS HD and CITIC Limited 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.