Correlation Between Arrow Electronics and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics 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 Arrow Electronics and Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Citic Telecom International, you can compare the effects of market volatilities on Arrow Electronics 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 Arrow Electronics with a short position of Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Citic Telecom.
Diversification Opportunities for Arrow Electronics and Citic Telecom
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Arrow and Citic is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics 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 Arrow 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 Arrow Electronics 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 Arrow Electronics i.e., Arrow Electronics and Citic Telecom go up and down completely randomly.
Pair Corralation between Arrow Electronics and Citic Telecom
Assuming the 90 days horizon Arrow Electronics is expected to generate 17.65 times less return on investment than Citic Telecom. But when comparing it to its historical volatility, Arrow Electronics is 4.59 times less risky than Citic Telecom. It trades about 0.02 of its potential returns per unit of risk. Citic Telecom International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3.96 in Citic Telecom International on September 3, 2024 and sell it today you would earn a total of 23.04 from holding Citic Telecom International or generate 581.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. Citic Telecom International
Performance |
| Timeline |
| Arrow Electronics |
| Citic Telecom Intern |
Arrow Electronics and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Citic Telecom
The main advantage of trading using opposite Arrow Electronics and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics 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.| Arrow Electronics vs. KAGA EL LTD | Arrow Electronics vs. Wayside Technology Group | Arrow Electronics vs. INNELEC MULTIMMINHEO153 |
| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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