Correlation Between CITIC Resources and Ardea Resources

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

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

Diversification Opportunities for CITIC Resources and Ardea Resources

-0.61

Correlation Coefficient

CITIC Resources  Ardea Resources

Excellent diversification

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

Pair Corralation between CITIC Resources and Ardea 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	4.76%
Values	Daily Returns

CITIC Resources Holdings  vs.  Ardea Resources Limited

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.

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.

Pair Trading with CITIC Resources and Ardea Resources

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

The idea behind CITIC Resources Holdings and Ardea Resources 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.