Correlation Between Fiberhome Telecommunicatio and China Telecom
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By analyzing existing cross correlation between Fiberhome Telecommunication Technologies and China Telecom Corp, you can compare the effects of market volatilities on Fiberhome Telecommunicatio and China 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 Fiberhome Telecommunicatio with a short position of China Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiberhome Telecommunicatio and China Telecom.
Diversification Opportunities for Fiberhome Telecommunicatio and China Telecom
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fiberhome and China is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fiberhome Telecommunication Te and China Telecom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Telecom Corp and Fiberhome Telecommunicatio 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 Fiberhome Telecommunication Technologies are associated (or correlated) with China Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Telecom Corp has no effect on the direction of Fiberhome Telecommunicatio i.e., Fiberhome Telecommunicatio and China Telecom go up and down completely randomly.
Pair Corralation between Fiberhome Telecommunicatio and China Telecom
Assuming the 90 days trading horizon Fiberhome Telecommunicatio is expected to generate 1.48 times less return on investment than China Telecom. In addition to that, Fiberhome Telecommunicatio is 1.77 times more volatile than China Telecom Corp. It trades about 0.03 of its total potential returns per unit of risk. China Telecom Corp is currently generating about 0.07 per unit of volatility. If you would invest 518.00 in China Telecom Corp on August 25, 2024 and sell it today you would earn a total of 124.00 from holding China Telecom Corp or generate 23.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiberhome Telecommunication Te vs. China Telecom Corp
Performance |
| Timeline |
| Fiberhome Telecommunicatio |
| China Telecom Corp |
Fiberhome Telecommunicatio and China Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiberhome Telecommunicatio and China Telecom
The main advantage of trading using opposite Fiberhome Telecommunicatio and China Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiberhome Telecommunicatio position performs unexpectedly, China 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 China Telecom will offset losses from the drop in China Telecom's long position.The idea behind Fiberhome Telecommunication Technologies and China Telecom Corp 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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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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