Correlation Between Nine Dragons and CITIC
Can any of the company-specific risk be diversified away by investing in both Nine Dragons and CITIC 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 Nine Dragons and CITIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nine Dragons Paper and CITIC LTD ADR5, you can compare the effects of market volatilities on Nine Dragons and CITIC 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 Nine Dragons with a short position of CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Dragons and CITIC.
Diversification Opportunities for Nine Dragons and CITIC
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nine and CITIC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nine Dragons Paper and CITIC LTD ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC LTD ADR5 and Nine Dragons 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 Nine Dragons Paper are associated (or correlated) with CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC LTD ADR5 has no effect on the direction of Nine Dragons i.e., Nine Dragons and CITIC go up and down completely randomly.
Pair Corralation between Nine Dragons and CITIC
Assuming the 90 days horizon Nine Dragons is expected to generate 3.03 times less return on investment than CITIC. In addition to that, Nine Dragons is 2.18 times more volatile than CITIC LTD ADR5. It trades about 0.01 of its total potential returns per unit of risk. CITIC LTD ADR5 is currently generating about 0.06 per unit of volatility. If you would invest 374.00 in CITIC LTD ADR5 on August 25, 2024 and sell it today you would earn a total of 141.00 from holding CITIC LTD ADR5 or generate 37.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nine Dragons Paper vs. CITIC LTD ADR5
Performance |
| Timeline |
| Nine Dragons Paper |
| CITIC LTD ADR5 |
Nine Dragons and CITIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Dragons and CITIC
The main advantage of trading using opposite Nine Dragons and CITIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Dragons position performs unexpectedly, CITIC 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 will offset losses from the drop in CITIC's long position.| Nine Dragons vs. IDP EDUCATION LTD | Nine Dragons vs. Zoom Video Communications | Nine Dragons vs. United Rentals | Nine Dragons vs. CHINA EDUCATION GROUP |
| CITIC vs. Superior Plus Corp | CITIC vs. NMI Holdings | CITIC vs. Origin Agritech | CITIC vs. SIVERS SEMICONDUCTORS AB |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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