Correlation Between CITIC and NAGOYA RAILROAD
Can any of the company-specific risk be diversified away by investing in both CITIC and NAGOYA RAILROAD 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 NAGOYA RAILROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC LTD ADR5 and NAGOYA RAILROAD, you can compare the effects of market volatilities on CITIC and NAGOYA RAILROAD 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 NAGOYA RAILROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC and NAGOYA RAILROAD.
Diversification Opportunities for CITIC and NAGOYA RAILROAD
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between CITIC and NAGOYA is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CITIC LTD ADR5 and NAGOYA RAILROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAGOYA RAILROAD 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 LTD ADR5 are associated (or correlated) with NAGOYA RAILROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAGOYA RAILROAD has no effect on the direction of CITIC i.e., CITIC and NAGOYA RAILROAD go up and down completely randomly.
Pair Corralation between CITIC and NAGOYA RAILROAD
Assuming the 90 days trading horizon CITIC LTD ADR5 is expected to under-perform the NAGOYA RAILROAD. In addition to that, CITIC is 1.29 times more volatile than NAGOYA RAILROAD. It trades about -0.22 of its total potential returns per unit of risk. NAGOYA RAILROAD is currently generating about -0.19 per unit of volatility. If you would invest 1,050 in NAGOYA RAILROAD on October 25, 2024 and sell it today you would lose (40.00) from holding NAGOYA RAILROAD or give up 3.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC LTD ADR5 vs. NAGOYA RAILROAD
Performance |
| Timeline |
| CITIC LTD ADR5 |
| NAGOYA RAILROAD |
CITIC and NAGOYA RAILROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC and NAGOYA RAILROAD
The main advantage of trading using opposite CITIC and NAGOYA RAILROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC position performs unexpectedly, NAGOYA RAILROAD 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 NAGOYA RAILROAD will offset losses from the drop in NAGOYA RAILROAD's long position.| CITIC vs. Federal Agricultural Mortgage | CITIC vs. FIREWEED METALS P | CITIC vs. Perseus Mining Limited | CITIC vs. Hanison Construction Holdings |
| NAGOYA RAILROAD vs. Honeywell International | NAGOYA RAILROAD vs. CITIC Limited | NAGOYA RAILROAD vs. CK Hutchison Holdings | NAGOYA RAILROAD vs. CK HUTCHISON HLDGS |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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