Correlation Between Charles Schwab and CITIC Securities

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

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

Diversification Opportunities for Charles Schwab and CITIC Securities

-0.74

Correlation Coefficient

Charles Schwab  CITIC Securities

Pay attention - limited upside

The 3 months correlation between Charles and CITIC is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Charles Schwab Corp and CITIC Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Securities and Charles Schwab 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 Charles Schwab Corp are associated (or correlated) with CITIC Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Securities has no effect on the direction of Charles Schwab i.e., Charles Schwab and CITIC Securities go up and down completely randomly.

Pair Corralation between Charles Schwab and CITIC Securities

If you would invest  6,967  in Charles Schwab Corp on January 20, 2024 and sell it today you would earn a total of  326.00  from holding Charles Schwab Corp or generate 4.68% return on investment over 90 days.

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

Charles Schwab Corp  vs.  CITIC Securities

Charles Schwab Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Charles Schwab Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical indicators, Charles Schwab showed solid returns over the last few months and may actually be approaching a breakup point.

CITIC Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Charles Schwab and CITIC Securities

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

The idea behind Charles Schwab Corp and CITIC Securities 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.