Correlation Between CITIC Securities and Fujian Anjoy

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

By analyzing existing cross correlation between CITIC Securities Co and Fujian Anjoy Foods, you can compare the effects of market volatilities on CITIC Securities and Fujian Anjoy 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 Securities with a short position of Fujian Anjoy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Securities and Fujian Anjoy.

Diversification Opportunities for CITIC Securities and Fujian Anjoy

0.8

Correlation Coefficient

CITIC Securities  Fujian Anjoy

Very poor diversification

The 3 months correlation between CITIC and Fujian is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Securities Co and Fujian Anjoy Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Anjoy Foods and CITIC Securities 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 Securities Co are associated (or correlated) with Fujian Anjoy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Anjoy Foods has no effect on the direction of CITIC Securities i.e., CITIC Securities and Fujian Anjoy go up and down completely randomly.

Pair Corralation between CITIC Securities and Fujian Anjoy

Assuming the 90 days trading horizon CITIC Securities Co is expected to generate 1.0 times more return on investment than Fujian Anjoy. However, CITIC Securities is 1.0 times more volatile than Fujian Anjoy Foods. It trades about 0.26 of its potential returns per unit of risk. Fujian Anjoy Foods is currently generating about 0.14 per unit of risk. If you would invest  1,892  in CITIC Securities Co on September 13, 2024 and sell it today you would earn a total of  1,242  from holding CITIC Securities Co or generate 65.64% return on investment over 90 days.

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

CITIC Securities Co  vs.  Fujian Anjoy Foods

CITIC Securities

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Securities Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CITIC Securities sustained solid returns over the last few months and may actually be approaching a breakup point.

Fujian Anjoy Foods

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Anjoy Foods are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Anjoy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC Securities and Fujian Anjoy

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

The idea behind CITIC Securities Co and Fujian Anjoy Foods 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.