Correlation Between CITIC Telecom and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and Alfa Financial 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 Alfa Financial 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 Alfa Financial Software, you can compare the effects of market volatilities on CITIC Telecom and Alfa Financial 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 Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and Alfa Financial.
Diversification Opportunities for CITIC Telecom and Alfa Financial
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CITIC and Alfa is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software 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 Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and Alfa Financial go up and down completely randomly.
Pair Corralation between CITIC Telecom and Alfa Financial
Assuming the 90 days horizon CITIC Telecom International is expected to generate 1.24 times more return on investment than Alfa Financial. However, CITIC Telecom is 1.24 times more volatile than Alfa Financial Software. It trades about 0.07 of its potential returns per unit of risk. Alfa Financial Software is currently generating about 0.03 per unit of risk. If you would invest 26.00 in CITIC Telecom International on September 15, 2024 and sell it today you would earn a total of 1.00 from holding CITIC Telecom International or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Telecom International vs. Alfa Financial Software
Performance |
| Timeline |
| CITIC Telecom Intern |
| Alfa Financial Software |
CITIC Telecom and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Telecom and Alfa Financial
The main advantage of trading using opposite CITIC Telecom and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| CITIC Telecom vs. Alfa Financial Software | CITIC Telecom vs. UPDATE SOFTWARE | CITIC Telecom vs. Guidewire Software | CITIC Telecom vs. Playtech plc |
| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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