Correlation Between CITIC and SUMITOMO P
Can any of the company-specific risk be diversified away by investing in both CITIC and SUMITOMO P 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 SUMITOMO P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC Limited and SUMITOMO P SP, you can compare the effects of market volatilities on CITIC and SUMITOMO P 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 SUMITOMO P. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC and SUMITOMO P.
Diversification Opportunities for CITIC and SUMITOMO P
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CITIC and SUMITOMO is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and SUMITOMO P SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMITOMO P SP 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 SUMITOMO P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMITOMO P SP has no effect on the direction of CITIC i.e., CITIC and SUMITOMO P go up and down completely randomly.
Pair Corralation between CITIC and SUMITOMO P
Assuming the 90 days horizon CITIC Limited is expected to generate 3.04 times more return on investment than SUMITOMO P. However, CITIC is 3.04 times more volatile than SUMITOMO P SP. It trades about 0.1 of its potential returns per unit of risk. SUMITOMO P SP is currently generating about 0.03 per unit of risk. If you would invest 21.00 in CITIC Limited on August 25, 2024 and sell it today you would earn a total of 88.00 from holding CITIC Limited or generate 419.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Limited vs. SUMITOMO P SP
Performance |
| Timeline |
| CITIC Limited |
| SUMITOMO P SP |
CITIC and SUMITOMO P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC and SUMITOMO P
The main advantage of trading using opposite CITIC and SUMITOMO P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC position performs unexpectedly, SUMITOMO P 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 SUMITOMO P will offset losses from the drop in SUMITOMO P's long position.| CITIC vs. Superior Plus Corp | CITIC vs. NMI Holdings | CITIC vs. Origin Agritech | CITIC vs. SIVERS SEMICONDUCTORS AB |
| SUMITOMO P vs. Superior Plus Corp | SUMITOMO P vs. NMI Holdings | SUMITOMO P vs. Origin Agritech | SUMITOMO P 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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