Correlation Between CITIC and Poste Italiane

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

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

Diversification Opportunities for CITIC and Poste Italiane

0.53

Correlation Coefficient

CITIC  Poste Italiane

Very weak diversification

The 3 months correlation between CITIC and Poste is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and Poste Italiane SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poste Italiane SpA and CITIC 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 Limited are associated (or correlated) with Poste Italiane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poste Italiane SpA has no effect on the direction of CITIC i.e., CITIC and Poste Italiane go up and down completely randomly.

Pair Corralation between CITIC and Poste Italiane

Assuming the 90 days horizon CITIC Limited is expected to generate 1.83 times more return on investment than Poste Italiane. However, CITIC is 1.83 times more volatile than Poste Italiane SpA. It trades about 0.26 of its potential returns per unit of risk. Poste Italiane SpA is currently generating about 0.13 per unit of risk. If you would invest  102.00  in CITIC Limited on May 1, 2025 and sell it today you would earn a total of  31.00  from holding CITIC Limited or generate 30.39% return on investment over 90 days.

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

CITIC Limited  vs.  Poste Italiane SpA

CITIC Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Limited are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, CITIC reported solid returns over the last few months and may actually be approaching a breakup point.

Poste Italiane SpA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Poste Italiane SpA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Poste Italiane may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CITIC and Poste Italiane

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

The idea behind CITIC Limited and Poste Italiane SpA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.