Correlation Between Citic Telecom and Microsoft
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on Citic Telecom and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and Microsoft.
Diversification Opportunities for Citic Telecom and Microsoft
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citic and Microsoft is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Citic Telecom i.e., Citic Telecom and Microsoft go up and down completely randomly.
Pair Corralation between Citic Telecom and Microsoft
Assuming the 90 days trading horizon Citic Telecom International is expected to generate 3.32 times more return on investment than Microsoft. However, Citic Telecom is 3.32 times more volatile than Microsoft. It trades about 0.05 of its potential returns per unit of risk. Microsoft is currently generating about 0.0 per unit of risk. If you would invest 23.00 in Citic Telecom International on October 13, 2024 and sell it today you would earn a total of 4.00 from holding Citic Telecom International or generate 17.39% 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. Microsoft
Performance |
| Timeline |
| Citic Telecom Intern |
| Microsoft |
Citic Telecom and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and Microsoft
The main advantage of trading using opposite Citic Telecom and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Citic Telecom vs. MCEWEN MINING INC | Citic Telecom vs. ARDAGH METAL PACDL 0001 | Citic Telecom vs. MAGNUM MINING EXP | Citic Telecom vs. Western Copper and |
| Microsoft vs. Chengdu PUTIAN Telecommunications | Microsoft vs. ASURE SOFTWARE | Microsoft vs. Citic Telecom International | Microsoft vs. Easy Software AG |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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