Correlation Between CITIC and World Oil

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

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

Diversification Opportunities for CITIC and World Oil

-0.43

Correlation Coefficient

CITIC  World Oil

Very good diversification

The 3 months correlation between CITIC and World is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and World Oil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Oil Group 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 World Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Oil Group has no effect on the direction of CITIC i.e., CITIC and World Oil go up and down completely randomly.

Pair Corralation between CITIC and World Oil

Assuming the 90 days horizon CITIC Limited is expected to generate 0.3 times more return on investment than World Oil. However, CITIC Limited is 3.3 times less risky than World Oil. It trades about 0.05 of its potential returns per unit of risk. World Oil Group is currently generating about 0.01 per unit of risk. If you would invest  122.00  in CITIC Limited on May 25, 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CITIC Limited  vs.  World Oil Group

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.

World Oil Group

Risk-Adjusted Performance

Weakest

Over the last 90 days World Oil Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly conflicting basic indicators, World Oil may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with CITIC and World Oil

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

The idea behind CITIC Limited and World Oil Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.