Correlation Between Citic Telecom and Universal Display
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and Universal Display 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 Universal Display 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 Universal Display, you can compare the effects of market volatilities on Citic Telecom and Universal Display 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 Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and Universal Display.
Diversification Opportunities for Citic Telecom and Universal Display
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citic and Universal is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display has no effect on the direction of Citic Telecom i.e., Citic Telecom and Universal Display go up and down completely randomly.
Pair Corralation between Citic Telecom and Universal Display
Assuming the 90 days trading horizon Citic Telecom International is expected to generate 3.43 times more return on investment than Universal Display. However, Citic Telecom is 3.43 times more volatile than Universal Display. It trades about 0.07 of its potential returns per unit of risk. Universal Display is currently generating about 0.01 per unit of risk. If you would invest 11.00 in Citic Telecom International on September 4, 2024 and sell it today you would earn a total of 16.00 from holding Citic Telecom International or generate 145.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Telecom International vs. Universal Display
Performance |
| Timeline |
| Citic Telecom Intern |
| Universal Display |
Citic Telecom and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and Universal Display
The main advantage of trading using opposite Citic Telecom and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
| Universal Display vs. ASML HOLDING NY | Universal Display vs. ASML Holding NV | Universal Display vs. ASML Holding NV | Universal Display vs. Lam Research |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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