Correlation Between Citic Telecom and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and CNH Industrial 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 CNH Industrial 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 CNH Industrial NV, you can compare the effects of market volatilities on Citic Telecom and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and CNH Industrial.
Diversification Opportunities for Citic Telecom and CNH Industrial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citic and CNH is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Citic Telecom i.e., Citic Telecom and CNH Industrial go up and down completely randomly.
Pair Corralation between Citic Telecom and CNH Industrial
Assuming the 90 days trading horizon Citic Telecom International is expected to generate 3.96 times more return on investment than CNH Industrial. However, Citic Telecom is 3.96 times more volatile than CNH Industrial NV. It trades about 0.07 of its potential returns per unit of risk. CNH Industrial NV is currently generating about -0.01 per unit of risk. If you would invest 4.04 in Citic Telecom International on September 3, 2024 and sell it today you would earn a total of 21.96 from holding Citic Telecom International or generate 543.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Telecom International vs. CNH Industrial NV
Performance |
| Timeline |
| Citic Telecom Intern |
| CNH Industrial NV |
Citic Telecom and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and CNH Industrial
The main advantage of trading using opposite Citic Telecom and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
| CNH Industrial vs. TOTAL GABON | CNH Industrial vs. Walgreens Boots Alliance | CNH Industrial vs. Peak Resources Limited |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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