Correlation Between NMI Holdings and CITIC Telecom
Can any of the company-specific risk be diversified away by investing in both NMI Holdings 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 NMI Holdings and CITIC Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and CITIC Telecom International, you can compare the effects of market volatilities on NMI Holdings 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 NMI Holdings with a short position of CITIC Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and CITIC Telecom.
Diversification Opportunities for NMI Holdings and CITIC Telecom
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NMI and CITIC is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings 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 NMI Holdings 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 NMI Holdings 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 NMI Holdings i.e., NMI Holdings and CITIC Telecom go up and down completely randomly.
Pair Corralation between NMI Holdings and CITIC Telecom
Assuming the 90 days horizon NMI Holdings is expected to generate 0.95 times more return on investment than CITIC Telecom. However, NMI Holdings is 1.06 times less risky than CITIC Telecom. It trades about 0.12 of its potential returns per unit of risk. CITIC Telecom International is currently generating about 0.01 per unit of risk. If you would invest 3,520 in NMI Holdings on October 24, 2024 and sell it today you would earn a total of 120.00 from holding NMI Holdings or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. CITIC Telecom International
Performance |
| Timeline |
| NMI Holdings |
| CITIC Telecom Intern |
NMI Holdings and CITIC Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and CITIC Telecom
The main advantage of trading using opposite NMI Holdings and CITIC Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings 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.| NMI Holdings vs. TELECOM ITALRISP ADR10 | NMI Holdings vs. AWILCO DRILLING PLC | NMI Holdings vs. China Communications Services | NMI Holdings vs. Liberty Broadband |
| CITIC Telecom vs. Tencent Music Entertainment | CITIC Telecom vs. SOGECLAIR SA INH | CITIC Telecom vs. ALTAIR RES INC | CITIC Telecom vs. Alaska Air Group |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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