Correlation Between CITIC and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both CITIC and Newpark Resources 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 Newpark Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC Limited and Newpark Resources, you can compare the effects of market volatilities on CITIC and Newpark Resources 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 Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC and Newpark Resources.
Diversification Opportunities for CITIC and Newpark Resources
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CITIC and Newpark is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources 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 Newpark Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newpark Resources has no effect on the direction of CITIC i.e., CITIC and Newpark Resources go up and down completely randomly.
Pair Corralation between CITIC and Newpark Resources
Assuming the 90 days horizon CITIC is expected to generate 1.32 times less return on investment than Newpark Resources. In addition to that, CITIC is 2.09 times more volatile than Newpark Resources. It trades about 0.03 of its total potential returns per unit of risk. Newpark Resources is currently generating about 0.09 per unit of volatility. If you would invest 411.00 in Newpark Resources on September 2, 2024 and sell it today you would earn a total of 425.00 from holding Newpark Resources or generate 103.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 56.72% |
| Values | Daily Returns |
CITIC Limited vs. Newpark Resources
Performance |
| Timeline |
| CITIC Limited |
| Newpark Resources |
CITIC and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC and Newpark Resources
The main advantage of trading using opposite CITIC and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC position performs unexpectedly, Newpark Resources 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 Newpark Resources will offset losses from the drop in Newpark Resources' long position.| CITIC vs. KVH Industries | CITIC vs. Steven Madden | CITIC vs. Burlington Stores | CITIC vs. Victorias Secret Co |
| Newpark Resources vs. Enerflex | Newpark Resources vs. Now Inc | Newpark Resources vs. Bristow Group | Newpark Resources vs. Helix Energy Solutions |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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