Correlation Between Citic Telecom and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS, you can compare the effects of market volatilities on Citic Telecom and VULCAN MATERIALS 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 VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and VULCAN MATERIALS.
Diversification Opportunities for Citic Telecom and VULCAN MATERIALS
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citic and VULCAN is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS 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 VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of Citic Telecom i.e., Citic Telecom and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between Citic Telecom and VULCAN MATERIALS
Assuming the 90 days trading horizon Citic Telecom is expected to generate 2.51 times less return on investment than VULCAN MATERIALS. In addition to that, Citic Telecom is 1.06 times more volatile than VULCAN MATERIALS. It trades about 0.08 of its total potential returns per unit of risk. VULCAN MATERIALS is currently generating about 0.21 per unit of volatility. If you would invest 24,600 in VULCAN MATERIALS on September 5, 2024 and sell it today you would earn a total of 2,600 from holding VULCAN MATERIALS or generate 10.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citic Telecom International vs. VULCAN MATERIALS
Performance |
| Timeline |
| Citic Telecom Intern |
| VULCAN MATERIALS |
Citic Telecom and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and VULCAN MATERIALS
The main advantage of trading using opposite Citic Telecom and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, VULCAN MATERIALS 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 VULCAN MATERIALS will offset losses from the drop in VULCAN MATERIALS's long position.| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
| VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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