Correlation Between EAGLE MATERIALS and CITIC

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

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

Diversification Opportunities for EAGLE MATERIALS and CITIC

-0.54

Correlation Coefficient

EAGLE MATERIALS  CITIC

Excellent diversification

The 3 months correlation between EAGLE and CITIC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and CITIC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Limited and EAGLE MATERIALS 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 EAGLE MATERIALS 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 EAGLE MATERIALS i.e., EAGLE MATERIALS and CITIC go up and down completely randomly.

Pair Corralation between EAGLE MATERIALS and CITIC

Assuming the 90 days trading horizon EAGLE MATERIALS is expected to under-perform the CITIC. In addition to that, EAGLE MATERIALS is 1.36 times more volatile than CITIC Limited. It trades about -0.02 of its total potential returns per unit of risk. CITIC Limited is currently generating about 0.21 per unit of volatility. If you would invest  99.00  in CITIC Limited on April 24, 2025 and sell it today you would earn a total of  22.00  from holding CITIC Limited or generate 22.22% return on investment over 90 days.

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

EAGLE MATERIALS  vs.  CITIC Limited

EAGLE MATERIALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days EAGLE MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, EAGLE MATERIALS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

CITIC Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITIC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EAGLE MATERIALS and CITIC

The main advantage of trading using opposite EAGLE MATERIALS and CITIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS 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 EAGLE MATERIALS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.