Correlation Between CITIC Metal and Cofoe Medical

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

Diversification Opportunities for CITIC Metal and Cofoe Medical

0.9

Correlation Coefficient

CITIC Metal  Cofoe Medical

Almost no diversification

The 3 months correlation between CITIC and Cofoe is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Metal Co and Cofoe Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cofoe Medical Technology 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 Cofoe Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cofoe Medical Technology has no effect on the direction of CITIC Metal i.e., CITIC Metal and Cofoe Medical go up and down completely randomly.

Pair Corralation between CITIC Metal and Cofoe Medical

Assuming the 90 days trading horizon CITIC Metal Co is expected to under-perform the Cofoe Medical. But the stock apears to be less risky and, when comparing its historical volatility, CITIC Metal Co is 1.46 times less risky than Cofoe Medical. The stock trades about -0.1 of its potential returns per unit of risk. The Cofoe Medical Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,738  in Cofoe Medical Technology on September 24, 2024 and sell it today you would earn a total of  72.00  from holding Cofoe Medical Technology or generate 1.93% return on investment over 90 days.

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

CITIC Metal Co  vs.  Cofoe Medical Technology

CITIC Metal

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Metal Co are ranked lower than 4 (%) 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.

Cofoe Medical Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cofoe Medical Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cofoe Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC Metal and Cofoe Medical

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

The idea behind CITIC Metal Co and Cofoe Medical Technology 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.