Correlation Between Citic and Teijin
Can any of the company-specific risk be diversified away by investing in both Citic and Teijin 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 Teijin 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 Teijin, you can compare the effects of market volatilities on Citic and Teijin 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 Teijin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic and Teijin.
Diversification Opportunities for Citic and Teijin
Very good diversification
The 3 months correlation between Citic and Teijin is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Citic Ltd ADR and Teijin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teijin 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 Teijin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teijin has no effect on the direction of Citic i.e., Citic and Teijin go up and down completely randomly.
Pair Corralation between Citic and Teijin
Assuming the 90 days horizon Citic Ltd ADR is expected to generate 2.42 times more return on investment than Teijin. However, Citic is 2.42 times more volatile than Teijin. It trades about -0.01 of its potential returns per unit of risk. Teijin is currently generating about -0.25 per unit of risk. If you would invest 615.00 in Citic Ltd ADR on August 30, 2024 and sell it today you would lose (8.00) from holding Citic Ltd ADR or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Ltd ADR vs. Teijin
Performance |
| Timeline |
| Citic Ltd ADR |
| Teijin |
Citic and Teijin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic and Teijin
The main advantage of trading using opposite Citic and Teijin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic position performs unexpectedly, Teijin 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 Teijin will offset losses from the drop in Teijin's long position.| Citic vs. Honeywell International | Citic vs. MDU Resources Group | Citic vs. Compass Diversified Holdings | Citic vs. Valmont Industries |
| Teijin vs. Toray Industries ADR | Teijin vs. Nitto Denko Corp | Teijin vs. NSK Ltd ADR | Teijin vs. Secom Co Ltd |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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