Correlation Between Materialise and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both Materialise and Citic Telecom 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 Materialise and Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materialise NV and Citic Telecom International, you can compare the effects of market volatilities on Materialise and Citic Telecom 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 Materialise with a short position of Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and Citic Telecom.
Diversification Opportunities for Materialise and Citic Telecom
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Materialise and Citic is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Citic Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Telecom Intern and Materialise 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 Materialise NV are associated (or correlated) with Citic Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Telecom Intern has no effect on the direction of Materialise i.e., Materialise and Citic Telecom go up and down completely randomly.
Pair Corralation between Materialise and Citic Telecom
Assuming the 90 days trading horizon Materialise is expected to generate 40.2 times less return on investment than Citic Telecom. But when comparing it to its historical volatility, Materialise NV is 2.42 times less risky than Citic Telecom. It trades about 0.0 of its potential returns per unit of risk. Citic Telecom International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4.19 in Citic Telecom International on October 31, 2024 and sell it today you would earn a total of 21.81 from holding Citic Telecom International or generate 520.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materialise NV vs. Citic Telecom International
Performance |
| Timeline |
| Materialise NV |
| Citic Telecom Intern |
Materialise and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materialise and Citic Telecom
The main advantage of trading using opposite Materialise and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, Citic Telecom 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 Citic Telecom will offset losses from the drop in Citic Telecom's long position.| Materialise vs. United Airlines Holdings | Materialise vs. Solstad Offshore ASA | Materialise vs. Granite Construction | Materialise vs. Eidesvik Offshore ASA |
| Citic Telecom vs. IDP EDUCATION LTD | Citic Telecom vs. Northern Data AG | Citic Telecom vs. TERADATA | Citic Telecom vs. DATAGROUP SE |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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