Correlation Between BP Prudhoe and CITIC Securities

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

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

Diversification Opportunities for BP Prudhoe and CITIC Securities

-0.33

Correlation Coefficient

BP Prudhoe  CITIC Securities

Very good diversification

The 3 months correlation between BMI and CITIC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding BP Prudhoe Bay and CITIC Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Securities and BP Prudhoe 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 BP Prudhoe Bay 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 BP Prudhoe i.e., BP Prudhoe and CITIC Securities go up and down completely randomly.

Pair Corralation between BP Prudhoe and CITIC Securities

Assuming the 90 days horizon BP Prudhoe is expected to generate 49.01 times less return on investment than CITIC Securities. In addition to that, BP Prudhoe is 2.2 times more volatile than CITIC Securities. It trades about 0.0 of its total potential returns per unit of risk. CITIC Securities is currently generating about 0.17 per unit of volatility. If you would invest  215.00  in CITIC Securities on April 21, 2025 and sell it today you would earn a total of  65.00  from holding CITIC Securities or generate 30.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.38%
Values	Daily Returns

BP Prudhoe Bay  vs.  CITIC Securities

BP Prudhoe Bay

Risk-Adjusted Performance

Very Weak

Over the last 90 days BP Prudhoe Bay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BP Prudhoe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CITIC Securities

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Securities are ranked lower than 13 (%) 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 BP Prudhoe and CITIC Securities

The main advantage of trading using opposite BP Prudhoe and CITIC Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Prudhoe 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 BP Prudhoe Bay 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.