Correlation Between Citic Guoan and North Copper
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By analyzing existing cross correlation between Citic Guoan Wine and North Copper Shanxi, you can compare the effects of market volatilities on Citic Guoan and North Copper 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 Guoan with a short position of North Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Guoan and North Copper.
Diversification Opportunities for Citic Guoan and North Copper
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citic and North is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and North Copper Shanxi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Copper Shanxi and Citic Guoan 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 Guoan Wine are associated (or correlated) with North Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Copper Shanxi has no effect on the direction of Citic Guoan i.e., Citic Guoan and North Copper go up and down completely randomly.
Pair Corralation between Citic Guoan and North Copper
Assuming the 90 days trading horizon Citic Guoan is expected to generate 1.8 times less return on investment than North Copper. But when comparing it to its historical volatility, Citic Guoan Wine is 1.78 times less risky than North Copper. It trades about 0.07 of its potential returns per unit of risk. North Copper Shanxi is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 880.00 in North Copper Shanxi on November 7, 2024 and sell it today you would earn a total of 26.00 from holding North Copper Shanxi or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Guoan Wine vs. North Copper Shanxi
Performance |
| Timeline |
| Citic Guoan Wine |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| North Copper Shanxi |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citic Guoan and North Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Guoan and North Copper
The main advantage of trading using opposite Citic Guoan and North Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Guoan position performs unexpectedly, North Copper 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 North Copper will offset losses from the drop in North Copper's long position.The idea behind Citic Guoan Wine and North Copper Shanxi 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.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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