Correlation Between China CITIC and Community West
Can any of the company-specific risk be diversified away by investing in both China CITIC and Community West 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 China CITIC and Community West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China CITIC Bank and Community West Bancshares, you can compare the effects of market volatilities on China CITIC and Community West 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 China CITIC with a short position of Community West. Check out your portfolio center. Please also check ongoing floating volatility patterns of China CITIC and Community West.
Diversification Opportunities for China CITIC and Community West
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Community is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding China CITIC Bank and Community West Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community West Bancshares and China CITIC 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 China CITIC Bank are associated (or correlated) with Community West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community West Bancshares has no effect on the direction of China CITIC i.e., China CITIC and Community West go up and down completely randomly.
Pair Corralation between China CITIC and Community West
Assuming the 90 days horizon China CITIC Bank is expected to generate 1.42 times more return on investment than Community West. However, China CITIC is 1.42 times more volatile than Community West Bancshares. It trades about 0.05 of its potential returns per unit of risk. Community West Bancshares is currently generating about 0.06 per unit of risk. If you would invest 43.00 in China CITIC Bank on August 27, 2024 and sell it today you would earn a total of 16.00 from holding China CITIC Bank or generate 37.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.23% |
| Values | Daily Returns |
China CITIC Bank vs. Community West Bancshares
Performance |
| Timeline |
| China CITIC Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Community West Bancshares |
China CITIC and Community West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China CITIC and Community West
The main advantage of trading using opposite China CITIC and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China CITIC position performs unexpectedly, Community West 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 Community West will offset losses from the drop in Community West's long position.| China CITIC vs. Postal Savings Bank | China CITIC vs. China Merchants Bank | China CITIC vs. China Merchants Bank | China CITIC vs. Community West Bancshares |
| Community West vs. Home Federal Bancorp | Community West vs. Magyar Bancorp | Community West vs. First Northwest Bancorp | Community West vs. First Financial Northwest |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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