Correlation Between CITIC Telecom and Seven West

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Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and Seven West 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 Seven West 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 Seven West Media, you can compare the effects of market volatilities on CITIC Telecom and Seven West 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 Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and Seven West.

Diversification Opportunities for CITIC Telecom and Seven West

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between CITIC and Seven is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and Seven West go up and down completely randomly.

Pair Corralation between CITIC Telecom and Seven West

Assuming the 90 days horizon CITIC Telecom International is expected to generate 1.83 times more return on investment than Seven West. However, CITIC Telecom is 1.83 times more volatile than Seven West Media. It trades about 0.07 of its potential returns per unit of risk. Seven West Media is currently generating about -0.04 per unit of risk. If you would invest  4.04  in CITIC Telecom International on October 17, 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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CITIC Telecom International  vs.  Seven West Media

 Performance 
       Timeline  
CITIC Telecom Intern 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Telecom International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITIC Telecom may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Seven West Media 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Seven West Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Seven West is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CITIC Telecom and Seven West Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CITIC Telecom and Seven West

The main advantage of trading using opposite CITIC Telecom and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West's long position.
The idea behind CITIC Telecom International and Seven West Media pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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