Correlation Between Citic and Alaska Power
Can any of the company-specific risk be diversified away by investing in both Citic and Alaska Power 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 Alaska Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citic Ltd ADR and Alaska Power Telephone, you can compare the effects of market volatilities on Citic and Alaska Power 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 Alaska Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic and Alaska Power.
Diversification Opportunities for Citic and Alaska Power
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citic and Alaska is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citic Ltd ADR and Alaska Power Telephone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Power Telephone 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 ADR are associated (or correlated) with Alaska Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Power Telephone has no effect on the direction of Citic i.e., Citic and Alaska Power go up and down completely randomly.
Pair Corralation between Citic and Alaska Power
Assuming the 90 days horizon Citic Ltd ADR is expected to under-perform the Alaska Power. In addition to that, Citic is 5.09 times more volatile than Alaska Power Telephone. It trades about -0.01 of its total potential returns per unit of risk. Alaska Power Telephone is currently generating about 0.29 per unit of volatility. If you would invest 5,340 in Alaska Power Telephone on August 25, 2024 and sell it today you would earn a total of 210.00 from holding Alaska Power Telephone or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Ltd ADR vs. Alaska Power Telephone
Performance |
| Timeline |
| Citic Ltd ADR |
| Alaska Power Telephone |
Citic and Alaska Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic and Alaska Power
The main advantage of trading using opposite Citic and Alaska Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic position performs unexpectedly, Alaska Power 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 Alaska Power will offset losses from the drop in Alaska Power's long position.| Citic vs. Honeywell International | Citic vs. MDU Resources Group | Citic vs. Compass Diversified Holdings | Citic vs. Valmont Industries |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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