Correlation Between CITIC Telecom and Vistra Corp
Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and Vistra Corp 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 CITIC Telecom and Vistra Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC Telecom International and Vistra Corp, you can compare the effects of market volatilities on CITIC Telecom and Vistra Corp 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 CITIC Telecom with a short position of Vistra Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and Vistra Corp.
Diversification Opportunities for CITIC Telecom and Vistra Corp
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CITIC and Vistra is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and Vistra Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vistra Corp and CITIC Telecom 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 CITIC Telecom International are associated (or correlated) with Vistra Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vistra Corp has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and Vistra Corp go up and down completely randomly.
Pair Corralation between CITIC Telecom and Vistra Corp
Assuming the 90 days horizon CITIC Telecom is expected to generate 96.46 times less return on investment than Vistra Corp. But when comparing it to its historical volatility, CITIC Telecom International is 2.06 times less risky than Vistra Corp. It trades about 0.01 of its potential returns per unit of risk. Vistra Corp is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 13,615 in Vistra Corp on October 24, 2024 and sell it today you would earn a total of 4,345 from holding Vistra Corp or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
CITIC Telecom International vs. Vistra Corp
Performance |
| Timeline |
| CITIC Telecom Intern |
| Vistra Corp |
CITIC Telecom and Vistra Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Telecom and Vistra Corp
The main advantage of trading using opposite CITIC Telecom and Vistra Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom position performs unexpectedly, Vistra Corp 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 Vistra Corp will offset losses from the drop in Vistra Corp's long position.| CITIC Telecom vs. Tencent Music Entertainment | CITIC Telecom vs. SOGECLAIR SA INH | CITIC Telecom vs. ALTAIR RES INC | CITIC Telecom vs. Alaska Air Group |
| Vistra Corp vs. InPlay Oil Corp | Vistra Corp vs. DATAGROUP SE | Vistra Corp vs. ePlay Digital | Vistra Corp vs. PLAYTECH |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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