Correlation Between China Resources and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both China Resources and Citic Telecom 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 China Resources and Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Beer and Citic Telecom International, you can compare the effects of market volatilities on China Resources and Citic Telecom 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 China Resources with a short position of Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Citic Telecom.
Diversification Opportunities for China Resources and Citic Telecom
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Citic is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Citic Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Telecom Intern and China Resources 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 China Resources Beer are associated (or correlated) with Citic Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Telecom Intern has no effect on the direction of China Resources i.e., China Resources and Citic Telecom go up and down completely randomly.
Pair Corralation between China Resources and Citic Telecom
Assuming the 90 days horizon China Resources Beer is expected to under-perform the Citic Telecom. But the stock apears to be less risky and, when comparing its historical volatility, China Resources Beer is 2.49 times less risky than Citic Telecom. The stock trades about -0.01 of its potential returns per unit of risk. The Citic Telecom International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3.96 in Citic Telecom International on September 3, 2024 and sell it today you would earn a total of 23.04 from holding Citic Telecom International or generate 581.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Resources Beer vs. Citic Telecom International
Performance |
| Timeline |
| China Resources Beer |
| Citic Telecom Intern |
China Resources and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Citic Telecom
The main advantage of trading using opposite China Resources and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Citic Telecom 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 Citic Telecom will offset losses from the drop in Citic Telecom's long position.| China Resources vs. Chuangs China Investments | China Resources vs. PennyMac Mortgage Investment | China Resources vs. Wyndham Hotels Resorts | China Resources vs. MHP Hotel AG |
| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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