Correlation Between Citic Telecom and Renesas Electronics
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics, you can compare the effects of market volatilities on Citic Telecom and Renesas Electronics 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 Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and Renesas Electronics.
Diversification Opportunities for Citic Telecom and Renesas Electronics
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citic and Renesas is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics 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 Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of Citic Telecom i.e., Citic Telecom and Renesas Electronics go up and down completely randomly.
Pair Corralation between Citic Telecom and Renesas Electronics
Assuming the 90 days trading horizon Citic Telecom International is expected to generate 2.5 times more return on investment than Renesas Electronics. However, Citic Telecom is 2.5 times more volatile than Renesas Electronics. It trades about 0.07 of its potential returns per unit of risk. Renesas Electronics is currently generating about 0.03 per unit of risk. If you would invest 3.96 in Citic Telecom International on September 3, 2024 and sell it today you would earn a total of 22.04 from holding Citic Telecom International or generate 556.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Telecom International vs. Renesas Electronics
Performance |
| Timeline |
| Citic Telecom Intern |
| Renesas Electronics |
Citic Telecom and Renesas Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and Renesas Electronics
The main advantage of trading using opposite Citic Telecom and Renesas Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, Renesas Electronics 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 Renesas Electronics will offset losses from the drop in Renesas Electronics' long position.| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
| Renesas Electronics vs. NVIDIA | Renesas Electronics vs. Taiwan Semiconductor Manufacturing | Renesas Electronics vs. Advanced Micro Devices | Renesas Electronics vs. Intel |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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