Correlation Between Citic Telecom and S A P
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and S A P 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 S A P 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 SAP SE, you can compare the effects of market volatilities on Citic Telecom and S A P 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 S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and S A P.
Diversification Opportunities for Citic Telecom and S A P
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citic and SAP is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Citic Telecom i.e., Citic Telecom and S A P go up and down completely randomly.
Pair Corralation between Citic Telecom and S A P
Assuming the 90 days trading horizon Citic Telecom is expected to generate 10.35 times less return on investment than S A P. In addition to that, Citic Telecom is 2.24 times more volatile than SAP SE. It trades about 0.01 of its total potential returns per unit of risk. SAP SE is currently generating about 0.31 per unit of volatility. If you would invest 21,295 in SAP SE on November 6, 2024 and sell it today you would earn a total of 5,020 from holding SAP SE or generate 23.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Telecom International vs. SAP SE
Performance |
| Timeline |
| Citic Telecom Intern |
| SAP SE |
Citic Telecom and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and S A P
The main advantage of trading using opposite Citic Telecom and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.| Citic Telecom vs. JLF INVESTMENT | Citic Telecom vs. BORR DRILLING NEW | Citic Telecom vs. Major Drilling Group | Citic Telecom vs. Pembina Pipeline Corp |
| S A P vs. UMC Electronics Co | S A P vs. Richardson Electronics | S A P vs. TT Electronics PLC | S A P vs. American Airlines Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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