Correlation Between Honeywell International and CITIC
Can any of the company-specific risk be diversified away by investing in both Honeywell International and CITIC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Honeywell International and CITIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and CITIC Limited, you can compare the effects of market volatilities on Honeywell International and 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 Honeywell International with a short position of CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and CITIC.
Diversification Opportunities for Honeywell International and CITIC
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Honeywell and CITIC is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and CITIC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Limited and Honeywell International 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 Honeywell International are associated (or correlated) with CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Limited has no effect on the direction of Honeywell International i.e., Honeywell International and CITIC go up and down completely randomly.
Pair Corralation between Honeywell International and CITIC
Assuming the 90 days trading horizon Honeywell International is expected to generate 0.74 times more return on investment than CITIC. However, Honeywell International is 1.35 times less risky than CITIC. It trades about 0.41 of its potential returns per unit of risk. CITIC Limited is currently generating about -0.09 per unit of risk. If you would invest 19,056 in Honeywell International on August 29, 2024 and sell it today you would earn a total of 2,909 from holding Honeywell International or generate 15.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honeywell International vs. CITIC Limited
Performance |
| Timeline |
| Honeywell International |
| CITIC Limited |
Honeywell International and CITIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell International and CITIC
The main advantage of trading using opposite Honeywell International and CITIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, 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 CITIC will offset losses from the drop in CITIC's long position.| Honeywell International vs. BioNTech SE | Honeywell International vs. Sunny Optical Technology | Honeywell International vs. Playtech plc | Honeywell International vs. NetSol Technologies |
| CITIC vs. Superior Plus Corp | CITIC vs. NMI Holdings | CITIC vs. Origin Agritech | CITIC vs. SIVERS SEMICONDUCTORS AB |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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