Correlation Between China TowerLimited and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both China TowerLimited and Telenor ASA 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 TowerLimited and Telenor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Tower and Telenor ASA ADR, you can compare the effects of market volatilities on China TowerLimited and Telenor ASA 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 TowerLimited with a short position of Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of China TowerLimited and Telenor ASA.
Diversification Opportunities for China TowerLimited and Telenor ASA
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Telenor is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding China Tower and Telenor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA ADR and China TowerLimited 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 Tower are associated (or correlated) with Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA ADR has no effect on the direction of China TowerLimited i.e., China TowerLimited and Telenor ASA go up and down completely randomly.
Pair Corralation between China TowerLimited and Telenor ASA
Assuming the 90 days horizon China Tower is expected to generate 1.71 times more return on investment than Telenor ASA. However, China TowerLimited is 1.71 times more volatile than Telenor ASA ADR. It trades about 0.02 of its potential returns per unit of risk. Telenor ASA ADR is currently generating about -0.01 per unit of risk. If you would invest 13.00 in China Tower on August 30, 2024 and sell it today you would earn a total of 0.00 from holding China Tower or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Tower vs. Telenor ASA ADR
Performance |
| Timeline |
| China TowerLimited |
| Telenor ASA ADR |
China TowerLimited and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China TowerLimited and Telenor ASA
The main advantage of trading using opposite China TowerLimited and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China TowerLimited position performs unexpectedly, Telenor ASA 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.| China TowerLimited vs. Singapore Telecommunications Limited | China TowerLimited vs. Vodafone Group PLC | China TowerLimited vs. PT Indosat Tbk | China TowerLimited vs. KDDI Corp |
| Telenor ASA vs. Bank Rakyat | Telenor ASA vs. PT Bank Rakyat | Telenor ASA vs. Samsung Electronics Co | Telenor ASA vs. Bank Mandiri Persero |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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