Correlation Between Citic Guoan and Emdoor Information

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

By analyzing existing cross correlation between Citic Guoan Wine and Emdoor Information Co, you can compare the effects of market volatilities on Citic Guoan and Emdoor Information 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 Emdoor Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Guoan and Emdoor Information.

Diversification Opportunities for Citic Guoan and Emdoor Information

0.81

Correlation Coefficient

Citic Guoan  Emdoor Information

Very poor diversification

The 3 months correlation between Citic and Emdoor is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and Emdoor Information Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emdoor Information 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 Wine are associated (or correlated) with Emdoor Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emdoor Information has no effect on the direction of Citic Guoan i.e., Citic Guoan and Emdoor Information go up and down completely randomly.

Pair Corralation between Citic Guoan and Emdoor Information

Assuming the 90 days trading horizon Citic Guoan Wine is expected to under-perform the Emdoor Information. But the stock apears to be less risky and, when comparing its historical volatility, Citic Guoan Wine is 1.88 times less risky than Emdoor Information. The stock trades about -0.12 of its potential returns per unit of risk. The Emdoor Information Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,712  in Emdoor Information Co on September 26, 2024 and sell it today you would earn a total of  573.00  from holding Emdoor Information Co or generate 12.16% return on investment over 90 days.

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

Citic Guoan Wine  vs.  Emdoor Information Co

Citic Guoan Wine

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Guoan Wine are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Citic Guoan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Emdoor Information

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Citic Guoan and Emdoor Information

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

The idea behind Citic Guoan Wine and Emdoor Information 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..