Correlation Between CITIC and Seaboard

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

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

Diversification Opportunities for CITIC and Seaboard

0.75

Correlation Coefficient

CITIC  Seaboard

Poor diversification

The 3 months correlation between CITIC and Seaboard is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and Seaboard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaboard 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 Seaboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaboard has no effect on the direction of CITIC i.e., CITIC and Seaboard go up and down completely randomly.

Pair Corralation between CITIC and Seaboard

Assuming the 90 days horizon CITIC is expected to generate 1.77 times less return on investment than Seaboard. In addition to that, CITIC is 1.06 times more volatile than Seaboard. It trades about 0.15 of its total potential returns per unit of risk. Seaboard is currently generating about 0.28 per unit of volatility. If you would invest  227,852  in Seaboard on May 27, 2025 and sell it today you would earn a total of  80,148  from holding Seaboard or generate 35.18% return on investment over 90 days.

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

CITIC Limited  vs.  Seaboard

CITIC Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CITIC reported solid returns over the last few months and may actually be approaching a breakup point.

Seaboard

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Seaboard are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Seaboard reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC and Seaboard

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

The idea behind CITIC Limited and Seaboard 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.