Correlation Between PARKEN Sport and CITIC

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

By analyzing existing cross correlation between PARKEN Sport Entertainment and CITIC LTD ADR5, you can compare the effects of market volatilities on PARKEN Sport 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 PARKEN Sport with a short position of CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and CITIC.

Diversification Opportunities for PARKEN Sport and CITIC

-0.22

Correlation Coefficient

PARKEN Sport  CITIC

Very good diversification

The 3 months correlation between PARKEN and CITIC is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and CITIC LTD ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC LTD ADR5 and PARKEN Sport 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 PARKEN Sport Entertainment 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 LTD ADR5 has no effect on the direction of PARKEN Sport i.e., PARKEN Sport and CITIC go up and down completely randomly.

Pair Corralation between PARKEN Sport and CITIC

Assuming the 90 days horizon PARKEN Sport Entertainment is expected to generate 3.08 times more return on investment than CITIC. However, PARKEN Sport is 3.08 times more volatile than CITIC LTD ADR5. It trades about 0.06 of its potential returns per unit of risk. CITIC LTD ADR5 is currently generating about 0.06 per unit of risk. If you would invest  666.00  in PARKEN Sport Entertainment on October 6, 2024 and sell it today you would earn a total of  1,049  from holding PARKEN Sport Entertainment or generate 157.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

PARKEN Sport Entertainment  vs.  CITIC LTD ADR5

PARKEN Sport Enterta

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PARKEN Sport Entertainment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PARKEN Sport reported solid returns over the last few months and may actually be approaching a breakup point.

CITIC LTD ADR5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC LTD ADR5 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with PARKEN Sport and CITIC

The main advantage of trading using opposite PARKEN Sport and CITIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport 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 PARKEN Sport Entertainment and CITIC LTD ADR5 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.