Correlation Between CITIC Resources and China Citic
Can any of the company-specific risk be diversified away by investing in both CITIC Resources and China 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 Resources and China Citic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC Resources Holdings and China Citic Bank, you can compare the effects of market volatilities on CITIC Resources and China 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 Resources with a short position of China Citic. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Resources and China Citic.
Diversification Opportunities for CITIC Resources and China Citic
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CITIC and China is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Resources Holdings and China Citic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Citic Bank and CITIC Resources 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 Resources Holdings are associated (or correlated) with China Citic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Citic Bank has no effect on the direction of CITIC Resources i.e., CITIC Resources and China Citic go up and down completely randomly.
Pair Corralation between CITIC Resources and China Citic
Assuming the 90 days horizon CITIC Resources Holdings is expected to generate 3.41 times more return on investment than China Citic. However, CITIC Resources is 3.41 times more volatile than China Citic Bank. It trades about 0.2 of its potential returns per unit of risk. China Citic Bank is currently generating about 0.19 per unit of risk. If you would invest 1,073 in CITIC Resources Holdings on January 20, 2024 and sell it today you would earn a total of 156.00 from holding CITIC Resources Holdings or generate 14.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Resources Holdings vs. China Citic Bank
Performance |
| Timeline |
| CITIC Resources Holdings |
| China Citic Bank |
CITIC Resources and China Citic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Resources and China Citic
The main advantage of trading using opposite CITIC Resources and China Citic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Resources position performs unexpectedly, China 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 China Citic will offset losses from the drop in China Citic's long position.| CITIC Resources vs. Avarone Metals | CITIC Resources vs. Azimut Exploration | CITIC Resources vs. Benton Resources |
| China Citic vs. China Everbright Bank | China Citic vs. China Merchants Bank | China Citic vs. Postal Savings Bank | China Citic vs. China Merchants Bank |
Check out your portfolio center.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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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