Correlation Between Citic Guoan and Caihong Display
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By analyzing existing cross correlation between Citic Guoan Wine and Caihong Display Devices, you can compare the effects of market volatilities on Citic Guoan and Caihong Display 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 Caihong Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Guoan and Caihong Display.
Diversification Opportunities for Citic Guoan and Caihong Display
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citic and Caihong is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and Caihong Display Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caihong Display Devices 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 Caihong Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caihong Display Devices has no effect on the direction of Citic Guoan i.e., Citic Guoan and Caihong Display go up and down completely randomly.
Pair Corralation between Citic Guoan and Caihong Display
Assuming the 90 days trading horizon Citic Guoan is expected to generate 3.61 times less return on investment than Caihong Display. But when comparing it to its historical volatility, Citic Guoan Wine is 1.74 times less risky than Caihong Display. It trades about 0.03 of its potential returns per unit of risk. Caihong Display Devices is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 812.00 in Caihong Display Devices on November 8, 2024 and sell it today you would earn a total of 25.00 from holding Caihong Display Devices or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Guoan Wine vs. Caihong Display Devices
Performance |
| Timeline |
| Citic Guoan Wine |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Caihong Display Devices |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Citic Guoan and Caihong Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Guoan and Caihong Display
The main advantage of trading using opposite Citic Guoan and Caihong Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Guoan position performs unexpectedly, Caihong Display 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 Caihong Display will offset losses from the drop in Caihong Display's long position.The idea behind Citic Guoan Wine and Caihong Display Devices 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 Stocks Directory module to find actively traded stocks across global markets.
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