Correlation Between Cobalt Blue and CITIC Resources

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

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

Diversification Opportunities for Cobalt Blue and CITIC Resources

-0.22

Correlation Coefficient

Cobalt Blue  CITIC Resources

Very good diversification

The 3 months correlation between Cobalt and CITIC is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cobalt Blue Holdings 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 Cobalt Blue 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 Cobalt Blue Holdings 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 Cobalt Blue i.e., Cobalt Blue and CITIC Resources go up and down completely randomly.

Pair Corralation between Cobalt Blue and CITIC Resources

If you would invest  5.01  in Cobalt Blue Holdings on September 22, 2024 and sell it today you would lose (0.76) from holding Cobalt Blue Holdings or give up 15.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Cobalt Blue Holdings  vs.  CITIC Resources Holdings

Cobalt Blue Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cobalt Blue Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Cobalt Blue reported solid returns over the last few months and may actually be approaching a breakup point.

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 Cobalt Blue and CITIC Resources

The main advantage of trading using opposite Cobalt Blue and CITIC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cobalt Blue 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 Cobalt Blue Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.