Correlation Between CITIC Telecom and WI LAN
Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and WI LAN 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 WI LAN 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 WI LAN, you can compare the effects of market volatilities on CITIC Telecom and WI LAN 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 WI LAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and WI LAN.
Diversification Opportunities for CITIC Telecom and WI LAN
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CITIC and WJL is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and WI LAN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WI LAN 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 WI LAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WI LAN has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and WI LAN go up and down completely randomly.
Pair Corralation between CITIC Telecom and WI LAN
Assuming the 90 days horizon CITIC Telecom International is expected to generate 1.08 times more return on investment than WI LAN. However, CITIC Telecom is 1.08 times more volatile than WI LAN. It trades about -0.08 of its potential returns per unit of risk. WI LAN is currently generating about -0.14 per unit of risk. If you would invest 27.00 in CITIC Telecom International on November 3, 2024 and sell it today you would lose (1.00) from holding CITIC Telecom International or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CITIC Telecom International vs. WI LAN
Performance |
| Timeline |
| CITIC Telecom Intern |
| WI LAN |
CITIC Telecom and WI LAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Telecom and WI LAN
The main advantage of trading using opposite CITIC Telecom and WI LAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom position performs unexpectedly, WI LAN 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 WI LAN will offset losses from the drop in WI LAN's long position.| CITIC Telecom vs. KENEDIX OFFICE INV | CITIC Telecom vs. STRAYER EDUCATION | CITIC Telecom vs. DFS Furniture PLC | CITIC Telecom vs. HAVERTY FURNITURE A |
| WI LAN vs. Dalata Hotel Group | WI LAN vs. American Public Education | WI LAN vs. Strategic Education | WI LAN vs. Hyatt Hotels |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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