Correlation Between Goldman Sachs and CITIC Securities

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

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

Diversification Opportunities for Goldman Sachs and CITIC Securities

0.86

Correlation Coefficient

Goldman Sachs  CITIC Securities

Very poor diversification

The 3 months correlation between Goldman and CITIC is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding The Goldman Sachs and CITIC Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Securities and Goldman Sachs 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 The Goldman Sachs 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 Goldman Sachs i.e., Goldman Sachs and CITIC Securities go up and down completely randomly.

Pair Corralation between Goldman Sachs and CITIC Securities

Assuming the 90 days trading horizon The Goldman Sachs is expected to generate 0.6 times more return on investment than CITIC Securities. However, The Goldman Sachs is 1.65 times less risky than CITIC Securities. It trades about 0.32 of its potential returns per unit of risk. CITIC Securities is currently generating about 0.17 per unit of risk. If you would invest  44,623  in The Goldman Sachs on April 21, 2025 and sell it today you would earn a total of  16,157  from holding The Goldman Sachs or generate 36.21% return on investment over 90 days.

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

The Goldman Sachs  vs.  CITIC Securities

Goldman Sachs

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain basic indicators, CITIC Securities reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and CITIC Securities

The main advantage of trading using opposite Goldman Sachs and CITIC Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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 The Goldman Sachs 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.