Correlation Between CITIC Telecom and Nokia
Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and Nokia 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 Nokia 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 Nokia, you can compare the effects of market volatilities on CITIC Telecom and Nokia 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 Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and Nokia.
Diversification Opportunities for CITIC Telecom and Nokia
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CITIC and Nokia is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia 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 Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and Nokia go up and down completely randomly.
Pair Corralation between CITIC Telecom and Nokia
Assuming the 90 days horizon CITIC Telecom International is expected to generate 3.23 times more return on investment than Nokia. However, CITIC Telecom is 3.23 times more volatile than Nokia. It trades about 0.07 of its potential returns per unit of risk. Nokia is currently generating about 0.01 per unit of risk. If you would invest 4.19 in CITIC Telecom International on September 12, 2024 and sell it today you would earn a total of 22.81 from holding CITIC Telecom International or generate 544.39% 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. Nokia
Performance |
| Timeline |
| CITIC Telecom Intern |
| Nokia |
CITIC Telecom and Nokia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Telecom and Nokia
The main advantage of trading using opposite CITIC Telecom and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom position performs unexpectedly, Nokia 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 Nokia will offset losses from the drop in Nokia's long position.| CITIC Telecom vs. Superior Plus Corp | CITIC Telecom vs. SIVERS SEMICONDUCTORS AB | CITIC Telecom vs. Norsk Hydro ASA | CITIC Telecom vs. Reliance Steel Aluminum |
| Nokia vs. Zijin Mining Group | Nokia vs. CITIC Telecom International | Nokia vs. INTERSHOP Communications Aktiengesellschaft | Nokia vs. ADRIATIC METALS LS 013355 |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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