Correlation Between CITIC and Honeywell International
Can any of the company-specific risk be diversified away by investing in both CITIC and Honeywell International 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 Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC Limited and Honeywell International, you can compare the effects of market volatilities on CITIC and Honeywell International 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 Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC and Honeywell International.
Diversification Opportunities for CITIC and Honeywell International
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CITIC and Honeywell is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International 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 Honeywell International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honeywell International has no effect on the direction of CITIC i.e., CITIC and Honeywell International go up and down completely randomly.
Pair Corralation between CITIC and Honeywell International
Assuming the 90 days horizon CITIC Limited is expected to under-perform the Honeywell International. In addition to that, CITIC is 1.35 times more volatile than Honeywell International. It trades about -0.09 of its total potential returns per unit of risk. Honeywell International is currently generating about 0.41 per unit of volatility. If you would invest 19,056 in Honeywell International on August 28, 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 |
CITIC Limited vs. Honeywell International
Performance |
| Timeline |
| CITIC Limited |
| Honeywell International |
CITIC and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC and Honeywell International
The main advantage of trading using opposite CITIC and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC position performs unexpectedly, Honeywell International 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 Honeywell International will offset losses from the drop in Honeywell International's long position.| CITIC vs. Superior Plus Corp | CITIC vs. NMI Holdings | CITIC vs. Origin Agritech | CITIC vs. SIVERS SEMICONDUCTORS AB |
| Honeywell International vs. BioNTech SE | Honeywell International vs. Sunny Optical Technology | Honeywell International vs. Playtech plc | Honeywell International vs. NetSol Technologies |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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