Correlation Between Citic Telecom and Taiwan Semiconductor
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and Taiwan Semiconductor 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 Taiwan Semiconductor 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 Taiwan Semiconductor Manufacturing, you can compare the effects of market volatilities on Citic Telecom and Taiwan Semiconductor 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 Taiwan Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and Taiwan Semiconductor.
Diversification Opportunities for Citic Telecom and Taiwan Semiconductor
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citic and Taiwan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Taiwan Semiconductor Manufactu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Semiconductor 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 Taiwan Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Semiconductor has no effect on the direction of Citic Telecom i.e., Citic Telecom and Taiwan Semiconductor go up and down completely randomly.
Pair Corralation between Citic Telecom and Taiwan Semiconductor
Assuming the 90 days trading horizon Citic Telecom International is expected to generate 3.58 times more return on investment than Taiwan Semiconductor. However, Citic Telecom is 3.58 times more volatile than Taiwan Semiconductor Manufacturing. It trades about 0.07 of its potential returns per unit of risk. Taiwan Semiconductor Manufacturing is currently generating about 0.13 per unit of risk. If you would invest 10.00 in Citic Telecom International on August 26, 2024 and sell it today you would earn a total of 17.00 from holding Citic Telecom International or generate 170.0% 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. Taiwan Semiconductor Manufactu
Performance |
| Timeline |
| Citic Telecom Intern |
| Taiwan Semiconductor |
Citic Telecom and Taiwan Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and Taiwan Semiconductor
The main advantage of trading using opposite Citic Telecom and Taiwan Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, Taiwan Semiconductor 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 Taiwan Semiconductor will offset losses from the drop in Taiwan Semiconductor's long position.| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
| Taiwan Semiconductor vs. NVIDIA | Taiwan Semiconductor vs. NVIDIA | Taiwan Semiconductor vs. QUALCOMM Incorporated | Taiwan Semiconductor vs. Advanced Micro Devices |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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