Correlation Between Citic Telecom and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL, you can compare the effects of market volatilities on Citic Telecom and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and KINGBOARD CHEMICAL.
Diversification Opportunities for Citic Telecom and KINGBOARD CHEMICAL
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citic and KINGBOARD is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of Citic Telecom i.e., Citic Telecom and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between Citic Telecom and KINGBOARD CHEMICAL
Assuming the 90 days trading horizon Citic Telecom International is expected to generate 0.79 times more return on investment than KINGBOARD CHEMICAL. However, Citic Telecom International is 1.27 times less risky than KINGBOARD CHEMICAL. It trades about 0.2 of its potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.15 per unit of risk. If you would invest 26.00 in Citic Telecom International on December 4, 2024 and sell it today you would earn a total of 3.00 from holding Citic Telecom International or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Telecom International vs. KINGBOARD CHEMICAL
Performance |
| Timeline |
| Citic Telecom Intern |
| KINGBOARD CHEMICAL |
Citic Telecom and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and KINGBOARD CHEMICAL
The main advantage of trading using opposite Citic Telecom and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL will offset losses from the drop in KINGBOARD CHEMICAL's long position.| Citic Telecom vs. Planet Fitness | Citic Telecom vs. DEVRY EDUCATION GRP | Citic Telecom vs. National Health Investors | Citic Telecom vs. Molina Healthcare |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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