Correlation Between Citic Telecom and DAIDO METAL
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and DAIDO METAL 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 DAIDO METAL 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 DAIDO METAL TD, you can compare the effects of market volatilities on Citic Telecom and DAIDO METAL 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 DAIDO METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and DAIDO METAL.
Diversification Opportunities for Citic Telecom and DAIDO METAL
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citic and DAIDO is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and DAIDO METAL TD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIDO METAL TD 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 DAIDO METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIDO METAL TD has no effect on the direction of Citic Telecom i.e., Citic Telecom and DAIDO METAL go up and down completely randomly.
Pair Corralation between Citic Telecom and DAIDO METAL
Assuming the 90 days trading horizon Citic Telecom International is expected to generate 4.02 times more return on investment than DAIDO METAL. However, Citic Telecom is 4.02 times more volatile than DAIDO METAL TD. It trades about 0.07 of its potential returns per unit of risk. DAIDO METAL TD is currently generating about -0.01 per unit of risk. If you would invest 9.89 in Citic Telecom International on November 8, 2024 and sell it today you would earn a total of 17.11 from holding Citic Telecom International or generate 173.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Telecom International vs. DAIDO METAL TD
Performance |
| Timeline |
| Citic Telecom Intern |
| DAIDO METAL TD |
Citic Telecom and DAIDO METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and DAIDO METAL
The main advantage of trading using opposite Citic Telecom and DAIDO METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, DAIDO METAL 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 DAIDO METAL will offset losses from the drop in DAIDO METAL's long position.| Citic Telecom vs. NAGOYA RAILROAD | Citic Telecom vs. EVS Broadcast Equipment | Citic Telecom vs. DFS Furniture PLC | Citic Telecom vs. Nishi Nippon Railroad Co |
| DAIDO METAL vs. VULCAN MATERIALS | DAIDO METAL vs. THRACE PLASTICS | DAIDO METAL vs. Plastic Omnium | DAIDO METAL vs. NEWELL RUBBERMAID |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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