Correlation Between Xp and CITIC Securities
Can any of the company-specific risk be diversified away by investing in both Xp 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 Xp and CITIC Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and CITIC Securities Co, you can compare the effects of market volatilities on Xp 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 Xp with a short position of CITIC Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and CITIC Securities.
Diversification Opportunities for Xp and CITIC Securities
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xp and CITIC is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and CITIC Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Securities and Xp 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 Xp Inc 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 Xp i.e., Xp and CITIC Securities go up and down completely randomly.
Pair Corralation between Xp and CITIC Securities
Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the CITIC Securities. But the stock apears to be less risky and, when comparing its historical volatility, Xp Inc is 5.07 times less risky than CITIC Securities. The stock trades about -0.1 of its potential returns per unit of risk. The CITIC Securities Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,612 in CITIC Securities Co on September 3, 2024 and sell it today you would earn a total of 883.00 from holding CITIC Securities Co or generate 54.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.6% |
| Values | Daily Returns |
Xp Inc vs. CITIC Securities Co
Performance |
| Timeline |
| Xp Inc |
| CITIC Securities |
Xp and CITIC Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and CITIC Securities
The main advantage of trading using opposite Xp and CITIC Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp 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.The idea behind Xp Inc and CITIC Securities Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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