Correlation Between Citic Telecom and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and Solstad Offshore 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 Solstad Offshore 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 Solstad Offshore ASA, you can compare the effects of market volatilities on Citic Telecom and Solstad Offshore 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 Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and Solstad Offshore.
Diversification Opportunities for Citic Telecom and Solstad Offshore
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citic and Solstad is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA 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 Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Citic Telecom i.e., Citic Telecom and Solstad Offshore go up and down completely randomly.
Pair Corralation between Citic Telecom and Solstad Offshore
Assuming the 90 days trading horizon Citic Telecom International is expected to generate 1.81 times more return on investment than Solstad Offshore. However, Citic Telecom is 1.81 times more volatile than Solstad Offshore ASA. It trades about 0.07 of its potential returns per unit of risk. Solstad Offshore ASA 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Telecom International vs. Solstad Offshore ASA
Performance |
| Timeline |
| Citic Telecom Intern |
| Solstad Offshore ASA |
Citic Telecom and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and Solstad Offshore
The main advantage of trading using opposite Citic Telecom and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
| Solstad Offshore vs. Liberty Broadband | Solstad Offshore vs. CHINA EDUCATION GROUP | Solstad Offshore vs. BROADSTNET LEADL 00025 | Solstad Offshore vs. EEDUCATION ALBERT AB |
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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