Correlation Between CITIC Metal and Liaoning Dingjide
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By analyzing existing cross correlation between CITIC Metal Co and Liaoning Dingjide Petrochemical, you can compare the effects of market volatilities on CITIC Metal and Liaoning Dingjide 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 Liaoning Dingjide. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Metal and Liaoning Dingjide.
Diversification Opportunities for CITIC Metal and Liaoning Dingjide
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CITIC and Liaoning is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and Liaoning Dingjide Petrochemica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Dingjide 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 Liaoning Dingjide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Dingjide has no effect on the direction of CITIC Metal i.e., CITIC Metal and Liaoning Dingjide go up and down completely randomly.
Pair Corralation between CITIC Metal and Liaoning Dingjide
Assuming the 90 days trading horizon CITIC Metal Co is expected to generate 0.18 times more return on investment than Liaoning Dingjide. However, CITIC Metal Co is 5.56 times less risky than Liaoning Dingjide. It trades about 0.13 of its potential returns per unit of risk. Liaoning Dingjide Petrochemical is currently generating about -0.08 per unit of risk. If you would invest 713.00 in CITIC Metal Co on November 7, 2024 and sell it today you would earn a total of 12.00 from holding CITIC Metal Co or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Metal Co vs. Liaoning Dingjide Petrochemica
Performance |
| Timeline |
| CITIC Metal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Liaoning Dingjide |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
CITIC Metal and Liaoning Dingjide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Metal and Liaoning Dingjide
The main advantage of trading using opposite CITIC Metal and Liaoning Dingjide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Metal position performs unexpectedly, Liaoning Dingjide 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 Liaoning Dingjide will offset losses from the drop in Liaoning Dingjide's long position.The idea behind CITIC Metal Co and Liaoning Dingjide Petrochemical 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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