Correlation Between Citic Telecom and TAL Education
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and TAL Education 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 TAL Education 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 TAL Education Group, you can compare the effects of market volatilities on Citic Telecom and TAL Education 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 TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and TAL Education.
Diversification Opportunities for Citic Telecom and TAL Education
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citic and TAL is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group 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 TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of Citic Telecom i.e., Citic Telecom and TAL Education go up and down completely randomly.
Pair Corralation between Citic Telecom and TAL Education
Assuming the 90 days trading horizon Citic Telecom International is expected to generate 0.66 times more return on investment than TAL Education. However, Citic Telecom International is 1.52 times less risky than TAL Education. It trades about 0.01 of its potential returns per unit of risk. TAL Education Group is currently generating about -0.07 per unit of risk. If you would invest 26.00 in Citic Telecom International on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Citic Telecom International or generate 0.0% 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. TAL Education Group
Performance |
| Timeline |
| Citic Telecom Intern |
| TAL Education Group |
Citic Telecom and TAL Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and TAL Education
The main advantage of trading using opposite Citic Telecom and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, TAL Education 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 TAL Education will offset losses from the drop in TAL Education's long position.| Citic Telecom vs. X Fab Silicon | Citic Telecom vs. Silicon Motion Technology | Citic Telecom vs. MACOM Technology Solutions | Citic Telecom vs. Micron Technology |
| TAL Education vs. Tradegate AG Wertpapierhandelsbank | TAL Education vs. Webster Financial | TAL Education vs. QBE Insurance Group | TAL Education vs. PKSHA TECHNOLOGY 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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