Correlation Between Tai Tung and China Mobile
Can any of the company-specific risk be diversified away by investing in both Tai Tung 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 Tai Tung and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tai Tung Communication and China Mobile, you can compare the effects of market volatilities on Tai Tung 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 Tai Tung with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tai Tung and China Mobile.
Diversification Opportunities for Tai Tung and China Mobile
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tai and China is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tai Tung Communication and China Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile and Tai Tung 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 Tai Tung Communication 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 Mobile has no effect on the direction of Tai Tung i.e., Tai Tung and China Mobile go up and down completely randomly.
Pair Corralation between Tai Tung and China Mobile
Assuming the 90 days trading horizon Tai Tung Communication is expected to under-perform the China Mobile. In addition to that, Tai Tung is 1.1 times more volatile than China Mobile. It trades about -0.15 of its total potential returns per unit of risk. China Mobile is currently generating about -0.1 per unit of volatility. If you would invest 1,370 in China Mobile on January 15, 2025 and sell it today you would lose (145.00) from holding China Mobile or give up 10.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tai Tung Communication vs. China Mobile
Performance |
| Timeline |
| Tai Tung Communication |
| China Mobile |
Tai Tung and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tai Tung and China Mobile
The main advantage of trading using opposite Tai Tung and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tai Tung 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.| Tai Tung vs. Zinwell | Tai Tung vs. Mercuries Life Insurance | Tai Tung vs. Darwin Precisions Corp | Tai Tung vs. Jinli Group Holdings |
| China Mobile vs. Taiwan Semiconductor Manufacturing | China Mobile vs. Hon Hai Precision | China Mobile vs. MediaTek | China Mobile vs. Chunghwa Telecom Co |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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