Correlation Between CITIC Securities and Sleep Number

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

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

Diversification Opportunities for CITIC Securities and Sleep Number

-0.18

Correlation Coefficient

CITIC Securities  Sleep Number

Good diversification

The 3 months correlation between CITIC and Sleep is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Securities and Sleep Number Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sleep Number Corp and CITIC Securities 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 Securities are associated (or correlated) with Sleep Number. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sleep Number Corp has no effect on the direction of CITIC Securities i.e., CITIC Securities and Sleep Number go up and down completely randomly.

Pair Corralation between CITIC Securities and Sleep Number

Assuming the 90 days horizon CITIC Securities is expected to generate 1.39 times less return on investment than Sleep Number. But when comparing it to its historical volatility, CITIC Securities is 2.17 times less risky than Sleep Number. It trades about 0.17 of its potential returns per unit of risk. Sleep Number Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  464.00  in Sleep Number Corp on April 21, 2025 and sell it today you would earn a total of  161.00  from holding Sleep Number Corp or generate 34.7% return on investment over 90 days.

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

CITIC Securities  vs.  Sleep Number Corp

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.

Sleep Number Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sleep Number Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sleep Number reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC Securities and Sleep Number

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

The idea behind CITIC Securities and Sleep Number Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .