Correlation Between Nedbank and China Citic
Can any of the company-specific risk be diversified away by investing in both Nedbank and China 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 Nedbank and China Citic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nedbank Group and China Citic Bank, you can compare the effects of market volatilities on Nedbank and China 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 Nedbank with a short position of China Citic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nedbank and China Citic.
Diversification Opportunities for Nedbank and China Citic
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nedbank and China is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nedbank Group and China Citic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Citic Bank and Nedbank 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 Nedbank Group are associated (or correlated) with China Citic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Citic Bank has no effect on the direction of Nedbank i.e., Nedbank and China Citic go up and down completely randomly.
Pair Corralation between Nedbank and China Citic
Assuming the 90 days horizon Nedbank Group is expected to generate 0.17 times more return on investment than China Citic. However, Nedbank Group is 6.0 times less risky than China Citic. It trades about -0.17 of its potential returns per unit of risk. China Citic Bank is currently generating about -0.05 per unit of risk. If you would invest 1,715 in Nedbank Group on August 28, 2024 and sell it today you would lose (92.00) from holding Nedbank Group or give up 5.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nedbank Group vs. China Citic Bank
Performance |
| Timeline |
| Nedbank Group |
| China Citic Bank |
Nedbank and China Citic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nedbank and China Citic
The main advantage of trading using opposite Nedbank and China Citic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nedbank position performs unexpectedly, China 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 China Citic will offset losses from the drop in China Citic's long position.| Nedbank vs. Standard Bank Group | Nedbank vs. Sanlam Ltd PK | Nedbank vs. Absa Group Ltd | Nedbank vs. Bank Mandiri Persero |
| China Citic vs. China Everbright Bank | China Citic vs. China Merchants Bank | China Citic vs. Postal Savings Bank | China Citic vs. China Merchants Bank |
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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