Correlation Between Valmont Industries and Citic
Can any of the company-specific risk be diversified away by investing in both Valmont Industries 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 Valmont Industries and Citic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valmont Industries and Citic Ltd ADR, you can compare the effects of market volatilities on Valmont Industries 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 Valmont Industries with a short position of Citic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valmont Industries and Citic.
Diversification Opportunities for Valmont Industries and Citic
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Valmont and Citic is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Valmont Industries and Citic Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Ltd ADR and Valmont Industries 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 Valmont Industries 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 ADR has no effect on the direction of Valmont Industries i.e., Valmont Industries and Citic go up and down completely randomly.
Pair Corralation between Valmont Industries and Citic
Considering the 90-day investment horizon Valmont Industries is expected to generate 0.64 times more return on investment than Citic. However, Valmont Industries is 1.57 times less risky than Citic. It trades about 0.15 of its potential returns per unit of risk. Citic Ltd ADR is currently generating about -0.01 per unit of risk. If you would invest 32,063 in Valmont Industries on August 25, 2024 and sell it today you would earn a total of 2,146 from holding Valmont Industries or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Valmont Industries vs. Citic Ltd ADR
Performance |
| Timeline |
| Valmont Industries |
| Citic Ltd ADR |
Valmont Industries and Citic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valmont Industries and Citic
The main advantage of trading using opposite Valmont Industries and Citic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valmont Industries 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.| Valmont Industries vs. Matthews International | Valmont Industries vs. Griffon | Valmont Industries vs. Brookfield Business Partners | Valmont Industries vs. MDU Resources Group |
| Citic vs. Honeywell International | Citic vs. MDU Resources Group | Citic vs. Compass Diversified Holdings | Citic vs. Valmont Industries |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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