Correlation Between Becle SA and CITIC

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

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

Diversification Opportunities for Becle SA and CITIC

-0.58

Correlation Coefficient

Becle SA  CITIC

Excellent diversification

The 3 months correlation between Becle and CITIC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Becle SA de and CITIC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Limited and Becle SA 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 Becle SA de are associated (or correlated) with CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Limited has no effect on the direction of Becle SA i.e., Becle SA and CITIC go up and down completely randomly.

Pair Corralation between Becle SA and CITIC

Assuming the 90 days horizon Becle SA de is expected to generate 0.9 times more return on investment than CITIC. However, Becle SA de is 1.11 times less risky than CITIC. It trades about -0.23 of its potential returns per unit of risk. CITIC Limited is currently generating about -0.22 per unit of risk. If you would invest  133.00  in Becle SA de on September 5, 2024 and sell it today you would lose (11.00) from holding Becle SA de or give up 8.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Becle SA de  vs.  CITIC Limited

Becle SA de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Becle SA de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CITIC Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, CITIC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Becle SA and CITIC

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

The idea behind Becle SA de and CITIC Limited 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.