Correlation Between Jardine Matheson and CITIC

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

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

Diversification Opportunities for Jardine Matheson and CITIC

0.21

Correlation Coefficient

Jardine Matheson  CITIC

Modest diversification

The 3 months correlation between Jardine and CITIC is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Jardine Matheson Holdings and CITIC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Limited and Jardine Matheson 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 Jardine Matheson Holdings 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 Jardine Matheson i.e., Jardine Matheson and CITIC go up and down completely randomly.

Pair Corralation between Jardine Matheson and CITIC

Assuming the 90 days horizon Jardine Matheson Holdings is expected to generate 0.54 times more return on investment than CITIC. However, Jardine Matheson Holdings is 1.85 times less risky than CITIC. It trades about 0.22 of its potential returns per unit of risk. CITIC Limited is currently generating about 0.12 per unit of risk. If you would invest  3,652  in Jardine Matheson Holdings on September 13, 2024 and sell it today you would earn a total of  819.00  from holding Jardine Matheson Holdings or generate 22.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Jardine Matheson Holdings  vs.  CITIC Limited

Jardine Matheson Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jardine Matheson Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Jardine Matheson showed solid returns over the last few months and may actually be approaching a breakup point.

CITIC Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, CITIC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jardine Matheson and CITIC

The main advantage of trading using opposite Jardine Matheson and CITIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jardine Matheson 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 Jardine Matheson Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.