Correlation Between Citic Telecom and DAIRY FARM
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and DAIRY FARM 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 DAIRY FARM 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 DAIRY FARM INTL, you can compare the effects of market volatilities on Citic Telecom and DAIRY FARM 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 DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and DAIRY FARM.
Diversification Opportunities for Citic Telecom and DAIRY FARM
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citic and DAIRY is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL 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 DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of Citic Telecom i.e., Citic Telecom and DAIRY FARM go up and down completely randomly.
Pair Corralation between Citic Telecom and DAIRY FARM
Assuming the 90 days trading horizon Citic Telecom is expected to generate 2.42 times less return on investment than DAIRY FARM. In addition to that, Citic Telecom is 1.58 times more volatile than DAIRY FARM INTL. It trades about 0.09 of its total potential returns per unit of risk. DAIRY FARM INTL is currently generating about 0.34 per unit of volatility. If you would invest 216.00 in DAIRY FARM INTL on August 25, 2024 and sell it today you would earn a total of 22.00 from holding DAIRY FARM INTL or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citic Telecom International vs. DAIRY FARM INTL
Performance |
| Timeline |
| Citic Telecom Intern |
| DAIRY FARM INTL |
Citic Telecom and DAIRY FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and DAIRY FARM
The main advantage of trading using opposite Citic Telecom and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, DAIRY FARM 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 DAIRY FARM will offset losses from the drop in DAIRY FARM's long position.| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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