Correlation Between APPLIED MATERIALS and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS 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 APPLIED MATERIALS and Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Citic Telecom International, you can compare the effects of market volatilities on APPLIED MATERIALS 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 APPLIED MATERIALS with a short position of Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Citic Telecom.
Diversification Opportunities for APPLIED MATERIALS and Citic Telecom
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between APPLIED and Citic is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS i.e., APPLIED MATERIALS and Citic Telecom go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and Citic Telecom
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to under-perform the Citic Telecom. In addition to that, APPLIED MATERIALS is 1.11 times more volatile than Citic Telecom International. It trades about -0.05 of its total potential returns per unit of risk. Citic Telecom International is currently generating about -0.02 per unit of volatility. If you would invest 27.00 in Citic Telecom International on August 31, 2024 and sell it today you would lose (1.00) from holding Citic Telecom International or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. Citic Telecom International
Performance |
| Timeline |
| APPLIED MATERIALS |
| Citic Telecom Intern |
APPLIED MATERIALS and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and Citic Telecom
The main advantage of trading using opposite APPLIED MATERIALS and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS 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.| APPLIED MATERIALS vs. Goodyear Tire Rubber | APPLIED MATERIALS vs. Entravision Communications | APPLIED MATERIALS vs. SBA Communications Corp | APPLIED MATERIALS vs. Ribbon Communications |
| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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