Correlation Between TT Electronics and China Communications
Can any of the company-specific risk be diversified away by investing in both TT Electronics and China Communications 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 TT Electronics and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TT Electronics PLC and China Communications Services, you can compare the effects of market volatilities on TT Electronics and China Communications 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 TT Electronics with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and China Communications.
Diversification Opportunities for TT Electronics and China Communications
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between 7TT and China is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and TT Electronics 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 TT Electronics PLC are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of TT Electronics i.e., TT Electronics and China Communications go up and down completely randomly.
Pair Corralation between TT Electronics and China Communications
Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the China Communications. In addition to that, TT Electronics is 1.2 times more volatile than China Communications Services. It trades about -0.39 of its total potential returns per unit of risk. China Communications Services is currently generating about -0.07 per unit of volatility. If you would invest 52.00 in China Communications Services on October 15, 2024 and sell it today you would lose (1.00) from holding China Communications Services or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TT Electronics PLC vs. China Communications Services
Performance |
| Timeline |
| TT Electronics PLC |
| China Communications |
TT Electronics and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TT Electronics and China Communications
The main advantage of trading using opposite TT Electronics and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics position performs unexpectedly, China Communications 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 Communications will offset losses from the drop in China Communications' long position.| TT Electronics vs. Nippon Light Metal | TT Electronics vs. SIERRA METALS | TT Electronics vs. Scientific Games | TT Electronics vs. AEON METALS LTD |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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