Correlation Between Citic and Halma PLC
Can any of the company-specific risk be diversified away by investing in both Citic and Halma PLC 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 Halma PLC 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 Halma PLC, you can compare the effects of market volatilities on Citic and Halma PLC 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 Halma PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic and Halma PLC.
Diversification Opportunities for Citic and Halma PLC
Very good diversification
The 3 months correlation between Citic and Halma is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citic Ltd ADR and Halma PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma PLC 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 Halma PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma PLC has no effect on the direction of Citic i.e., Citic and Halma PLC go up and down completely randomly.
Pair Corralation between Citic and Halma PLC
Assuming the 90 days horizon Citic Ltd ADR is expected to generate 2.0 times more return on investment than Halma PLC. However, Citic is 2.0 times more volatile than Halma PLC. It trades about 0.07 of its potential returns per unit of risk. Halma PLC is currently generating about 0.09 per unit of risk. If you would invest 479.00 in Citic Ltd ADR on September 1, 2024 and sell it today you would earn a total of 128.00 from holding Citic Ltd ADR or generate 26.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.85% |
| Values | Daily Returns |
Citic Ltd ADR vs. Halma PLC
Performance |
| Timeline |
| Citic Ltd ADR |
| Halma PLC |
Citic and Halma PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic and Halma PLC
The main advantage of trading using opposite Citic and Halma PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic position performs unexpectedly, Halma PLC 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 Halma PLC will offset losses from the drop in Halma PLC's long position.| Citic vs. Honeywell International | Citic vs. MDU Resources Group | Citic vs. Compass Diversified Holdings | Citic vs. Valmont Industries |
| Halma PLC vs. Seaboard | Halma PLC vs. Valmont Industries | Halma PLC vs. Honeywell International | Halma PLC vs. 3M Company |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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