Correlation Between Citic Guoan and Yoantion Industrial

Can any of the company-specific risk be diversified away by investing in both Citic Guoan and Yoantion Industrial 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 Yoantion Industrial 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 Yoantion Industrial IncLtd, you can compare the effects of market volatilities on Citic Guoan and Yoantion Industrial 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 Yoantion Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Guoan and Yoantion Industrial.

Diversification Opportunities for Citic Guoan and Yoantion Industrial

0.7

Correlation Coefficient

Citic Guoan  Yoantion Industrial

Poor diversification

The 3 months correlation between Citic and Yoantion is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Citic Guoan Wine and Yoantion Industrial IncLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yoantion Industrial 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 Yoantion Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yoantion Industrial has no effect on the direction of Citic Guoan i.e., Citic Guoan and Yoantion Industrial go up and down completely randomly.

Pair Corralation between Citic Guoan and Yoantion Industrial

Assuming the 90 days trading horizon Citic Guoan is expected to generate 1.44 times less return on investment than Yoantion Industrial. But when comparing it to its historical volatility, Citic Guoan Wine is 1.22 times less risky than Yoantion Industrial. It trades about 0.05 of its potential returns per unit of risk. Yoantion Industrial IncLtd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,853  in Yoantion Industrial IncLtd on September 26, 2024 and sell it today you would earn a total of  157.00  from holding Yoantion Industrial IncLtd or generate 8.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Citic Guoan Wine  vs.  Yoantion Industrial IncLtd

Citic Guoan Wine

Risk-Adjusted Performance

3 of 100

Insignificant

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.

Yoantion Industrial

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yoantion Industrial IncLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yoantion Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citic Guoan and Yoantion Industrial

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

The idea behind Citic Guoan Wine and Yoantion Industrial IncLtd 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.