Correlation Between CITIC and SBA Communications
Can any of the company-specific risk be diversified away by investing in both CITIC and SBA Communications 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 CITIC and SBA Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC Limited and SBA Communications Corp, you can compare the effects of market volatilities on CITIC and SBA Communications 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 with a short position of SBA Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC and SBA Communications.
Diversification Opportunities for CITIC and SBA Communications
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CITIC and SBA is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and SBA Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBA Communications Corp and 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 CITIC Limited are associated (or correlated) with SBA Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBA Communications Corp has no effect on the direction of CITIC i.e., CITIC and SBA Communications go up and down completely randomly.
Pair Corralation between CITIC and SBA Communications
Assuming the 90 days horizon CITIC Limited is expected to under-perform the SBA Communications. In addition to that, CITIC is 1.23 times more volatile than SBA Communications Corp. It trades about -0.05 of its total potential returns per unit of risk. SBA Communications Corp is currently generating about 0.08 per unit of volatility. If you would invest 20,980 in SBA Communications Corp on September 1, 2024 and sell it today you would earn a total of 600.00 from holding SBA Communications Corp or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CITIC Limited vs. SBA Communications Corp
Performance |
| Timeline |
| CITIC Limited |
| SBA Communications Corp |
CITIC and SBA Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC and SBA Communications
The main advantage of trading using opposite CITIC and SBA Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC position performs unexpectedly, SBA Communications 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 SBA Communications will offset losses from the drop in SBA Communications' long position.| CITIC vs. Caltagirone SpA | CITIC vs. REINET INVESTMENTS SCA | CITIC vs. BlueScope Steel Limited | CITIC vs. Tianjin Capital Environmental |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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