Correlation Between CITIC Resources and Cobalt Blue

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

Diversification Opportunities for CITIC Resources and Cobalt Blue

-0.22

Correlation Coefficient

CITIC Resources  Cobalt Blue

Very good diversification

The 3 months correlation between CITIC and Cobalt is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Resources Holdings and Cobalt Blue Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cobalt Blue Holdings 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 Cobalt Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cobalt Blue Holdings has no effect on the direction of CITIC Resources i.e., CITIC Resources and Cobalt Blue go up and down completely randomly.

Pair Corralation between CITIC Resources and Cobalt Blue

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

CITIC Resources Holdings  vs.  Cobalt Blue Holdings

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.

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.

Pair Trading with CITIC Resources and Cobalt Blue

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

The idea behind CITIC Resources Holdings and Cobalt Blue 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.