Correlation Between Iridium Communications and China Mobile
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and China Mobile 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 Iridium Communications and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and China Life Insurance, you can compare the effects of market volatilities on Iridium Communications and China Mobile 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 Iridium Communications with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and China Mobile.
Diversification Opportunities for Iridium Communications and China Mobile
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Iridium and China is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance and Iridium Communications 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 Iridium Communications are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of Iridium Communications i.e., Iridium Communications and China Mobile go up and down completely randomly.
Pair Corralation between Iridium Communications and China Mobile
Assuming the 90 days horizon Iridium Communications is expected to generate 0.9 times more return on investment than China Mobile. However, Iridium Communications is 1.11 times less risky than China Mobile. It trades about 0.06 of its potential returns per unit of risk. China Life Insurance is currently generating about -0.11 per unit of risk. If you would invest 2,619 in Iridium Communications on October 22, 2024 and sell it today you would earn a total of 94.00 from holding Iridium Communications or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.44% |
| Values | Daily Returns |
Iridium Communications vs. China Life Insurance
Performance |
| Timeline |
| Iridium Communications |
| China Life Insurance |
Iridium Communications and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and China Mobile
The main advantage of trading using opposite Iridium Communications and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, China Mobile 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 Mobile will offset losses from the drop in China Mobile's long position.| Iridium Communications vs. AGNC INVESTMENT | Iridium Communications vs. GALENA MINING LTD | Iridium Communications vs. GEELY AUTOMOBILE | Iridium Communications vs. MCEWEN MINING INC |
| China Mobile vs. Northern Data AG | China Mobile vs. NTT DATA | China Mobile vs. Advanced Medical Solutions | China Mobile vs. Teradata Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |