Correlation Between CITIC Telecom and EBRO FOODS
Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS, you can compare the effects of market volatilities on CITIC Telecom and EBRO FOODS 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 EBRO FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and EBRO FOODS.
Diversification Opportunities for CITIC Telecom and EBRO FOODS
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CITIC and EBRO is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and EBRO FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBRO FOODS 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 EBRO FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBRO FOODS has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and EBRO FOODS go up and down completely randomly.
Pair Corralation between CITIC Telecom and EBRO FOODS
Assuming the 90 days horizon CITIC Telecom International is expected to generate 6.36 times more return on investment than EBRO FOODS. However, CITIC Telecom is 6.36 times more volatile than EBRO FOODS. It trades about 0.07 of its potential returns per unit of risk. EBRO FOODS is currently generating about 0.02 per unit of risk. If you would invest 10.00 in CITIC Telecom International on September 14, 2024 and sell it today you would earn a total of 19.00 from holding CITIC Telecom International or generate 190.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Telecom International vs. EBRO FOODS
Performance |
| Timeline |
| CITIC Telecom Intern |
| EBRO FOODS |
CITIC Telecom and EBRO FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Telecom and EBRO FOODS
The main advantage of trading using opposite CITIC Telecom and EBRO FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom position performs unexpectedly, EBRO FOODS 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 EBRO FOODS will offset losses from the drop in EBRO FOODS's long position.| CITIC Telecom vs. Chesapeake Utilities | CITIC Telecom vs. TYSON FOODS A | CITIC Telecom vs. Suntory Beverage Food | CITIC Telecom vs. ScanSource |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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