Correlation Between CITIC Guoan and Hainan Haiqi

Can any of the company-specific risk be diversified away by investing in both CITIC Guoan and Hainan Haiqi 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 CITIC Guoan and Hainan Haiqi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CITIC Guoan Information and Hainan Haiqi Transportation, you can compare the effects of market volatilities on CITIC Guoan and Hainan Haiqi 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 CITIC Guoan with a short position of Hainan Haiqi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Guoan and Hainan Haiqi.

Diversification Opportunities for CITIC Guoan and Hainan Haiqi

0.96

Correlation Coefficient

CITIC Guoan  Hainan Haiqi

Almost no diversification

The 3 months correlation between CITIC and Hainan is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Guoan Information and Hainan Haiqi Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Haiqi Transpo and CITIC Guoan 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 CITIC Guoan Information are associated (or correlated) with Hainan Haiqi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Haiqi Transpo has no effect on the direction of CITIC Guoan i.e., CITIC Guoan and Hainan Haiqi go up and down completely randomly.

Pair Corralation between CITIC Guoan and Hainan Haiqi

Assuming the 90 days trading horizon CITIC Guoan Information is expected to generate 1.39 times more return on investment than Hainan Haiqi. However, CITIC Guoan is 1.39 times more volatile than Hainan Haiqi Transportation. It trades about 0.19 of its potential returns per unit of risk. Hainan Haiqi Transportation is currently generating about 0.18 per unit of risk. If you would invest  233.00  in CITIC Guoan Information on September 3, 2024 and sell it today you would earn a total of  118.00  from holding CITIC Guoan Information or generate 50.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

CITIC Guoan Information  vs.  Hainan Haiqi Transportation

CITIC Guoan Information

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Guoan Information are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CITIC Guoan sustained solid returns over the last few months and may actually be approaching a breakup point.

Hainan Haiqi Transpo

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hainan Haiqi Transportation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hainan Haiqi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC Guoan and Hainan Haiqi

The main advantage of trading using opposite CITIC Guoan and Hainan Haiqi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Guoan position performs unexpectedly, Hainan Haiqi 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 Hainan Haiqi will offset losses from the drop in Hainan Haiqi's long position.

The idea behind CITIC Guoan Information and Hainan Haiqi Transportation 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.