Correlation Between Consolidated Communications and China Mobile
Can any of the company-specific risk be diversified away by investing in both Consolidated Communications and China Mobile 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 Consolidated Communications and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consolidated Communications Holdings and China Life Insurance, you can compare the effects of market volatilities on Consolidated Communications and China Mobile 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 Consolidated Communications with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Communications and China Mobile.
Diversification Opportunities for Consolidated Communications and China Mobile
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Consolidated and China is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Communications Ho and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance and Consolidated Communications 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 Consolidated Communications Holdings are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of Consolidated Communications i.e., Consolidated Communications and China Mobile go up and down completely randomly.
Pair Corralation between Consolidated Communications and China Mobile
Assuming the 90 days horizon Consolidated Communications is expected to generate 10.92 times less return on investment than China Mobile. But when comparing it to its historical volatility, Consolidated Communications Holdings is 4.78 times less risky than China Mobile. It trades about 0.05 of its potential returns per unit of risk. China Life Insurance is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 66.00 in China Life Insurance on September 14, 2024 and sell it today you would earn a total of 119.00 from holding China Life Insurance or generate 180.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Communications Ho vs. China Life Insurance
Performance |
| Timeline |
| Consolidated Communications |
| China Life Insurance |
Consolidated Communications and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Communications and China Mobile
The main advantage of trading using opposite Consolidated Communications and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Communications position performs unexpectedly, China Mobile 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 China Mobile will offset losses from the drop in China Mobile's long position.The idea behind Consolidated Communications Holdings and China Life Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| China Mobile vs. SLR Investment Corp | China Mobile vs. JJ SNACK FOODS | China Mobile vs. THAI BEVERAGE | China Mobile vs. AOYAMA TRADING |
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.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |