Correlation Between Haitong Securities and CITIC Securities
Can any of the company-specific risk be diversified away by investing in both Haitong Securities and CITIC Securities 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 Haitong Securities and CITIC Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haitong Securities Co and CITIC Securities Co, you can compare the effects of market volatilities on Haitong Securities and CITIC Securities 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 Haitong Securities with a short position of CITIC Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haitong Securities and CITIC Securities.
Diversification Opportunities for Haitong Securities and CITIC Securities
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Haitong and CITIC is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Haitong Securities Co and CITIC Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Securities and Haitong Securities 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 Haitong Securities Co are associated (or correlated) with CITIC Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Securities has no effect on the direction of Haitong Securities i.e., Haitong Securities and CITIC Securities go up and down completely randomly.
Pair Corralation between Haitong Securities and CITIC Securities
Assuming the 90 days horizon Haitong Securities Co is expected to under-perform the CITIC Securities. But the pink sheet apears to be less risky and, when comparing its historical volatility, Haitong Securities Co is 1.72 times less risky than CITIC Securities. The pink sheet trades about -0.22 of its potential returns per unit of risk. The CITIC Securities Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,476 in CITIC Securities Co on September 3, 2024 and sell it today you would earn a total of 19.00 from holding CITIC Securities Co or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haitong Securities Co vs. CITIC Securities Co
Performance |
| Timeline |
| Haitong Securities |
| CITIC Securities |
Haitong Securities and CITIC Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haitong Securities and CITIC Securities
The main advantage of trading using opposite Haitong Securities and CITIC Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haitong Securities position performs unexpectedly, CITIC Securities 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 CITIC Securities will offset losses from the drop in CITIC Securities' long position.| Haitong Securities vs. First Tractor | Haitong Securities vs. Ag Growth International | Haitong Securities vs. AmeraMex International | Haitong Securities vs. Arts Way Manufacturing Co |
| CITIC Securities vs. First Tractor | CITIC Securities vs. Ag Growth International | CITIC Securities vs. AmeraMex International | CITIC Securities vs. Arts Way Manufacturing Co |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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