Correlation Between CITIC and Direct Communication

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

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

Diversification Opportunities for CITIC and Direct Communication

0.41

Correlation Coefficient

CITIC  Direct Communication

Very weak diversification

The 3 months correlation between CITIC and Direct is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and Direct Communication Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Communication 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 Direct Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Communication has no effect on the direction of CITIC i.e., CITIC and Direct Communication go up and down completely randomly.

Pair Corralation between CITIC and Direct Communication

If you would invest  122.00  in CITIC Limited on May 21, 2025 and sell it today you would earn a total of  9.00  from holding CITIC Limited or generate 7.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	67.21%
Values	Daily Returns

CITIC Limited  vs.  Direct Communication Solutions

CITIC Limited

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, CITIC may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Direct Communication

Risk-Adjusted Performance

Weakest

Over the last 90 days Direct Communication Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Direct Communication is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CITIC and Direct Communication

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

The idea behind CITIC Limited and Direct Communication Solutions 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.