Correlation Between CITIC Resources and Alphabet
Can any of the company-specific risk be diversified away by investing in both CITIC Resources and Alphabet 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 Alphabet 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 Alphabet Inc Class C, you can compare the effects of market volatilities on CITIC Resources and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Resources and Alphabet.
Diversification Opportunities for CITIC Resources and Alphabet
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CITIC and Alphabet is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Resources Holdings and Alphabet Inc Class C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class C 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class C has no effect on the direction of CITIC Resources i.e., CITIC Resources and Alphabet go up and down completely randomly.
Pair Corralation between CITIC Resources and Alphabet
Assuming the 90 days horizon CITIC Resources Holdings is expected to generate 1.34 times more return on investment than Alphabet. However, CITIC Resources is 1.34 times more volatile than Alphabet Inc Class C. It trades about 0.13 of its potential returns per unit of risk. Alphabet Inc Class C is currently generating about 0.14 per unit of risk. If you would invest 1,073 in CITIC Resources Holdings on February 3, 2024 and sell it today you would earn a total of 95.00 from holding CITIC Resources Holdings or generate 8.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.65% |
Values | Daily Returns |
CITIC Resources Holdings vs. Alphabet Inc Class C
Performance |
Timeline |
CITIC Resources Holdings |
Alphabet Class C |
CITIC Resources and Alphabet Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CITIC Resources and Alphabet
The main advantage of trading using opposite CITIC Resources and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Resources position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.CITIC Resources vs. OM Holdings Limited | CITIC Resources vs. Sherritt International | CITIC Resources vs. AMG Advanced Metallurgical | CITIC Resources vs. Metals X Limited |
Alphabet vs. Twilio Inc | Alphabet vs. Alphabet Inc Class A | Alphabet vs. Match Group | Alphabet vs. Spotify Technology SA |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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