Correlation Between Dollar General and CHINA TELECOM
Can any of the company-specific risk be diversified away by investing in both Dollar General and CHINA 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 Dollar General and CHINA TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar General and CHINA TELECOM H , you can compare the effects of market volatilities on Dollar General 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 Dollar General with a short position of CHINA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar General and CHINA TELECOM.
Diversification Opportunities for Dollar General and CHINA TELECOM
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dollar and CHINA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dollar General and CHINA TELECOM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA TELECOM H and Dollar General 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 Dollar General 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 H has no effect on the direction of Dollar General i.e., Dollar General and CHINA TELECOM go up and down completely randomly.
Pair Corralation between Dollar General and CHINA TELECOM
Assuming the 90 days horizon Dollar General is expected to under-perform the CHINA TELECOM. But the stock apears to be less risky and, when comparing its historical volatility, Dollar General is 1.26 times less risky than CHINA TELECOM. The stock trades about -0.04 of its potential returns per unit of risk. The CHINA TELECOM H is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 22.00 in CHINA TELECOM H on September 14, 2024 and sell it today you would earn a total of 30.00 from holding CHINA TELECOM H or generate 136.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollar General vs. CHINA TELECOM H
Performance |
| Timeline |
| Dollar General |
| CHINA TELECOM H |
Dollar General and CHINA TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar General and CHINA TELECOM
The main advantage of trading using opposite Dollar General and CHINA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar General 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.| Dollar General vs. Cogent Communications Holdings | Dollar General vs. Astral Foods Limited | Dollar General vs. Verizon Communications | Dollar General vs. THAI BEVERAGE |
| CHINA TELECOM vs. UNITED RENTALS | CHINA TELECOM vs. CAL MAINE FOODS | CHINA TELECOM vs. Shenandoah Telecommunications | CHINA TELECOM vs. MAROC TELECOM |
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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