Correlation Between DATANG INTL and CITIC Securities

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

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

Diversification Opportunities for DATANG INTL and CITIC Securities

0.66

Correlation Coefficient

DATANG INTL  CITIC Securities

Poor diversification

The 3 months correlation between DATANG and CITIC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding DATANG INTL POW and CITIC Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Securities and DATANG INTL 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 DATANG INTL POW are associated (or correlated) with CITIC Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Securities has no effect on the direction of DATANG INTL i.e., DATANG INTL and CITIC Securities go up and down completely randomly.

Pair Corralation between DATANG INTL and CITIC Securities

Assuming the 90 days trading horizon DATANG INTL is expected to generate 1.37 times less return on investment than CITIC Securities. In addition to that, DATANG INTL is 1.37 times more volatile than CITIC Securities. It trades about 0.13 of its total potential returns per unit of risk. CITIC Securities is currently generating about 0.24 per unit of volatility. If you would invest  203.00  in CITIC Securities on April 24, 2025 and sell it today you would earn a total of  91.00  from holding CITIC Securities or generate 44.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

DATANG INTL POW  vs.  CITIC Securities

DATANG INTL POW

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DATANG INTL POW are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DATANG INTL unveiled solid returns over the last few months and may actually be approaching a breakup point.

CITIC Securities

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Securities are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITIC Securities reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DATANG INTL and CITIC Securities

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

The idea behind DATANG INTL POW and CITIC Securities 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.