Correlation Between Citic and Windrock Land
Can any of the company-specific risk be diversified away by investing in both Citic and Windrock Land 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 Windrock Land 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 Windrock Land Co, you can compare the effects of market volatilities on Citic and Windrock Land 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 Windrock Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic and Windrock Land.
Diversification Opportunities for Citic and Windrock Land
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citic and Windrock is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citic Ltd ADR and Windrock Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Windrock Land 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 Windrock Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Windrock Land has no effect on the direction of Citic i.e., Citic and Windrock Land go up and down completely randomly.
Pair Corralation between Citic and Windrock Land
Assuming the 90 days horizon Citic Ltd ADR is expected to under-perform the Windrock Land. In addition to that, Citic is 3.43 times more volatile than Windrock Land Co. It trades about -0.01 of its total potential returns per unit of risk. Windrock Land Co is currently generating about 0.15 per unit of volatility. If you would invest 48,100 in Windrock Land Co on August 25, 2024 and sell it today you would earn a total of 1,400 from holding Windrock Land Co or generate 2.91% 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. Windrock Land Co
Performance |
| Timeline |
| Citic Ltd ADR |
| Windrock Land |
Citic and Windrock Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic and Windrock Land
The main advantage of trading using opposite Citic and Windrock Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic position performs unexpectedly, Windrock Land 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 Windrock Land will offset losses from the drop in Windrock Land's long position.| Citic vs. Honeywell International | Citic vs. MDU Resources Group | Citic vs. Compass Diversified Holdings | Citic vs. Valmont Industries |
| Windrock Land vs. Pardee Resources Co | Windrock Land vs. Merchants National Properties | Windrock Land vs. Beaver Coal Co | Windrock Land vs. The Reserve Petroleum |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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