Correlation Between China Longyuan and China Citic
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By analyzing existing cross correlation between China Longyuan Power and China Citic Bank, you can compare the effects of market volatilities on China Longyuan 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 China Longyuan with a short position of China Citic. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Longyuan and China Citic.
Diversification Opportunities for China Longyuan and China Citic
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and China is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding China Longyuan Power 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 China Longyuan 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 China Longyuan Power 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 China Longyuan i.e., China Longyuan and China Citic go up and down completely randomly.
Pair Corralation between China Longyuan and China Citic
Assuming the 90 days trading horizon China Longyuan Power is expected to generate 1.31 times more return on investment than China Citic. However, China Longyuan is 1.31 times more volatile than China Citic Bank. It trades about -0.01 of its potential returns per unit of risk. China Citic Bank is currently generating about -0.04 per unit of risk. If you would invest 1,825 in China Longyuan Power on August 25, 2024 and sell it today you would lose (102.00) from holding China Longyuan Power or give up 5.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Longyuan Power vs. China Citic Bank
Performance |
| Timeline |
| China Longyuan Power |
| China Citic Bank |
China Longyuan and China Citic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Longyuan and China Citic
The main advantage of trading using opposite China Longyuan and China Citic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Longyuan 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.| China Longyuan vs. Youyou Foods Co | China Longyuan vs. Hang Xiao Steel | China Longyuan vs. City Development Environment | China Longyuan vs. Air China Ltd |
| China Citic vs. Bomin Electronics Co | China Citic vs. CIMC Vehicles Co | China Citic vs. Unigroup Guoxin Microelectronics | China Citic vs. Xiangyang Automobile Bearing |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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