Correlation Between CITIC Metal and Sichuan Qiaoyuan
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By analyzing existing cross correlation between CITIC Metal Co and Sichuan Qiaoyuan Gas, you can compare the effects of market volatilities on CITIC Metal and Sichuan Qiaoyuan 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 Metal with a short position of Sichuan Qiaoyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Metal and Sichuan Qiaoyuan.
Diversification Opportunities for CITIC Metal and Sichuan Qiaoyuan
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between CITIC and Sichuan is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and Sichuan Qiaoyuan Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Qiaoyuan Gas and CITIC Metal 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 Metal Co are associated (or correlated) with Sichuan Qiaoyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Qiaoyuan Gas has no effect on the direction of CITIC Metal i.e., CITIC Metal and Sichuan Qiaoyuan go up and down completely randomly.
Pair Corralation between CITIC Metal and Sichuan Qiaoyuan
Assuming the 90 days trading horizon CITIC Metal Co is expected to generate 0.36 times more return on investment than Sichuan Qiaoyuan. However, CITIC Metal Co is 2.81 times less risky than Sichuan Qiaoyuan. It trades about 0.15 of its potential returns per unit of risk. Sichuan Qiaoyuan Gas is currently generating about -0.21 per unit of risk. If you would invest 717.00 in CITIC Metal Co on November 8, 2024 and sell it today you would earn a total of 13.00 from holding CITIC Metal Co or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Metal Co vs. Sichuan Qiaoyuan Gas
Performance |
| Timeline |
| CITIC Metal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sichuan Qiaoyuan Gas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
CITIC Metal and Sichuan Qiaoyuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Metal and Sichuan Qiaoyuan
The main advantage of trading using opposite CITIC Metal and Sichuan Qiaoyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Metal position performs unexpectedly, Sichuan Qiaoyuan 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 Sichuan Qiaoyuan will offset losses from the drop in Sichuan Qiaoyuan's long position.The idea behind CITIC Metal Co and Sichuan Qiaoyuan Gas 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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