Correlation Between CITIC Telecom and ScanSource
Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and ScanSource 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 ScanSource 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 ScanSource, you can compare the effects of market volatilities on CITIC Telecom and ScanSource 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 ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and ScanSource.
Diversification Opportunities for CITIC Telecom and ScanSource
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CITIC and ScanSource is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and ScanSource go up and down completely randomly.
Pair Corralation between CITIC Telecom and ScanSource
Assuming the 90 days horizon CITIC Telecom International is expected to generate 3.84 times more return on investment than ScanSource. However, CITIC Telecom is 3.84 times more volatile than ScanSource. It trades about 0.07 of its potential returns per unit of risk. ScanSource is currently generating about 0.05 per unit of risk. If you would invest 4.04 in CITIC Telecom International on October 7, 2024 and sell it today you would earn a total of 22.96 from holding CITIC Telecom International or generate 568.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Telecom International vs. ScanSource
Performance |
| Timeline |
| CITIC Telecom Intern |
| ScanSource |
CITIC Telecom and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Telecom and ScanSource
The main advantage of trading using opposite CITIC Telecom and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom position performs unexpectedly, ScanSource 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 ScanSource will offset losses from the drop in ScanSource's long position.| CITIC Telecom vs. T Mobile | CITIC Telecom vs. Nippon Telegraph and | CITIC Telecom vs. Superior Plus Corp | CITIC Telecom vs. NMI Holdings |
| ScanSource vs. MULTI CHEM LTD | ScanSource vs. Xtrackers LevDAX | ScanSource vs. Lyxor 1 | ScanSource vs. Xtrackers ShortDAX |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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