Correlation Between CITIC Telecom and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and Insteel Industries 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 Insteel Industries 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 Insteel Industries, you can compare the effects of market volatilities on CITIC Telecom and Insteel Industries 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 Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and Insteel Industries.
Diversification Opportunities for CITIC Telecom and Insteel Industries
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CITIC and Insteel is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries 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 Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and Insteel Industries go up and down completely randomly.
Pair Corralation between CITIC Telecom and Insteel Industries
Assuming the 90 days horizon CITIC Telecom International is expected to generate 2.62 times more return on investment than Insteel Industries. However, CITIC Telecom is 2.62 times more volatile than Insteel Industries. It trades about -0.19 of its potential returns per unit of risk. Insteel Industries is currently generating about -0.71 per unit of risk. If you would invest 29.00 in CITIC Telecom International on October 12, 2024 and sell it today you would lose (3.00) from holding CITIC Telecom International or give up 10.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Telecom International vs. Insteel Industries
Performance |
| Timeline |
| CITIC Telecom Intern |
| Insteel Industries |
CITIC Telecom and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Telecom and Insteel Industries
The main advantage of trading using opposite CITIC Telecom and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.| CITIC Telecom vs. Liberty Broadband | CITIC Telecom vs. Casio Computer CoLtd | CITIC Telecom vs. X FAB Silicon Foundries | CITIC Telecom vs. FANDIFI TECHNOLOGY P |
| Insteel Industries vs. CITIC Telecom International | Insteel Industries vs. Western Copper and | Insteel Industries vs. Chunghwa Telecom Co | Insteel Industries vs. Harmony Gold Mining |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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