Correlation Between Citic Telecom and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and Summit Hotel 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 Summit Hotel 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 Summit Hotel Properties, you can compare the effects of market volatilities on Citic Telecom and Summit Hotel 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 Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and Summit Hotel.
Diversification Opportunities for Citic Telecom and Summit Hotel
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citic and Summit is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties 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 Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of Citic Telecom i.e., Citic Telecom and Summit Hotel go up and down completely randomly.
Pair Corralation between Citic Telecom and Summit Hotel
Assuming the 90 days trading horizon Citic Telecom International is expected to generate 1.26 times more return on investment than Summit Hotel. However, Citic Telecom is 1.26 times more volatile than Summit Hotel Properties. It trades about 0.01 of its potential returns per unit of risk. Summit Hotel Properties is currently generating about -0.08 per unit of risk. If you would invest 27.00 in Citic Telecom International on October 12, 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. Summit Hotel Properties
Performance |
| Timeline |
| Citic Telecom Intern |
| Summit Hotel Properties |
Citic Telecom and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and Summit Hotel
The main advantage of trading using opposite Citic Telecom and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel'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 |
| Summit Hotel vs. FIRST SAVINGS FINL | Summit Hotel vs. Darden Restaurants | Summit Hotel vs. INTERSHOP Communications Aktiengesellschaft | Summit Hotel vs. Spirent Communications plc |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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