Correlation Between CITIC and Where Food

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

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

Diversification Opportunities for CITIC and Where Food

-0.57

Correlation Coefficient

CITIC  Where Food

Excellent diversification

The 3 months correlation between CITIC and Where is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Limited and Where Food Comes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Where Food Comes 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 Where Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Where Food Comes has no effect on the direction of CITIC i.e., CITIC and Where Food go up and down completely randomly.

Pair Corralation between CITIC and Where Food

Assuming the 90 days horizon CITIC Limited is expected to under-perform the Where Food. But the pink sheet apears to be less risky and, when comparing its historical volatility, CITIC Limited is 1.36 times less risky than Where Food. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Where Food Comes is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,090  in Where Food Comes on February 8, 2025 and sell it today you would earn a total of  15.00  from holding Where Food Comes or generate 1.38% 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.  Where Food Comes

CITIC Limited

Risk-Adjusted Performance

Insignificant

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

Where Food Comes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Where Food Comes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CITIC and Where Food

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

The idea behind CITIC Limited and Where Food Comes 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.