Correlation Between CITIC Metal and Innovative Medical

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

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

Diversification Opportunities for CITIC Metal and Innovative Medical

0.72

Correlation Coefficient

CITIC Metal  Innovative Medical

Poor diversification

The 3 months correlation between CITIC and Innovative is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and Innovative Medical Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Medical and CITIC Metal 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 Metal Co are associated (or correlated) with Innovative Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Medical has no effect on the direction of CITIC Metal i.e., CITIC Metal and Innovative Medical go up and down completely randomly.

Pair Corralation between CITIC Metal and Innovative Medical

Assuming the 90 days trading horizon CITIC Metal is expected to generate 5.89 times less return on investment than Innovative Medical. But when comparing it to its historical volatility, CITIC Metal Co is 2.03 times less risky than Innovative Medical. It trades about 0.08 of its potential returns per unit of risk. Innovative Medical Management is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  627.00  in Innovative Medical Management on September 20, 2024 and sell it today you would earn a total of  501.00  from holding Innovative Medical Management or generate 79.9% return on investment over 90 days.

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

CITIC Metal Co  vs.  Innovative Medical Management

CITIC Metal

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Metal Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CITIC Metal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Innovative Medical

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Medical Management are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Innovative Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC Metal and Innovative Medical

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

The idea behind CITIC Metal Co and Innovative Medical Management 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.