Correlation Between CITIC Metal and Yunnan Xiyi

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

Diversification Opportunities for CITIC Metal and Yunnan Xiyi

0.52

Correlation Coefficient

CITIC Metal  Yunnan Xiyi

Very weak diversification

The 3 months correlation between CITIC and Yunnan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and Yunnan Xiyi Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Xiyi Industrial 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 Yunnan Xiyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Xiyi Industrial has no effect on the direction of CITIC Metal i.e., CITIC Metal and Yunnan Xiyi go up and down completely randomly.

Pair Corralation between CITIC Metal and Yunnan Xiyi

Assuming the 90 days trading horizon CITIC Metal is expected to generate 5.75 times less return on investment than Yunnan Xiyi. But when comparing it to its historical volatility, CITIC Metal Co is 1.97 times less risky than Yunnan Xiyi. It trades about 0.14 of its potential returns per unit of risk. Yunnan Xiyi Industrial is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  889.00  in Yunnan Xiyi Industrial on September 13, 2024 and sell it today you would earn a total of  1,445  from holding Yunnan Xiyi Industrial or generate 162.54% return on investment over 90 days.

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

CITIC Metal Co  vs.  Yunnan Xiyi Industrial

CITIC Metal

Risk-Adjusted Performance

11 of 100

Good

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

Yunnan Xiyi Industrial

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Yunnan Xiyi Industrial are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yunnan Xiyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC Metal and Yunnan Xiyi

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

The idea behind CITIC Metal Co and Yunnan Xiyi Industrial 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.