Correlation Between Ardea Resources and CITIC Resources

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

By analyzing existing cross correlation between Ardea Resources Limited and CITIC Resources Holdings, you can compare the effects of market volatilities on Ardea Resources and CITIC Resources 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 Ardea Resources with a short position of CITIC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ardea Resources and CITIC Resources.

Diversification Opportunities for Ardea Resources and CITIC Resources

-0.61

Correlation Coefficient

Ardea Resources  CITIC Resources

Excellent diversification

The 3 months correlation between Ardea and CITIC is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ardea Resources Limited and CITIC Resources Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Resources Holdings and Ardea Resources 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 Ardea Resources Limited are associated (or correlated) with CITIC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Resources Holdings has no effect on the direction of Ardea Resources i.e., Ardea Resources and CITIC Resources go up and down completely randomly.

Pair Corralation between Ardea Resources and CITIC Resources

If you would invest  8.00  in CITIC Resources Holdings on September 22, 2024 and sell it today you would earn a total of  0.00  from holding CITIC Resources Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Ardea Resources Limited  vs.  CITIC Resources Holdings

Ardea Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardea Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CITIC Resources Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC Resources Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, CITIC Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ardea Resources and CITIC Resources

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

The idea behind Ardea Resources Limited and CITIC Resources Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.