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

0.27

Correlation Coefficient

CITIC Resources  China Citic

Modest diversification

The 3 months correlation between CITIC and China is 0.27. 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

If you would invest  1,073  in CITIC Resources Holdings on February 2, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

CITIC Resources Holdings  vs.  China Citic Bank

CITIC Resources Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Resources Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, CITIC Resources showed solid returns over the last few months and may actually be approaching a breakup point.

China Citic Bank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Citic Bank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking indicators, China Citic showed solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind CITIC Resources Holdings and China Citic Bank 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.