Correlation Between China Communications and CSL
Can any of the company-specific risk be diversified away by investing in both China Communications and CSL 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 Communications and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and CSL Limited, you can compare the effects of market volatilities on China Communications and CSL 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 Communications with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and CSL.
Diversification Opportunities for China Communications and CSL
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and CSL is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and China 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 China Communications Services are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL Limited has no effect on the direction of China Communications i.e., China Communications and CSL go up and down completely randomly.
Pair Corralation between China Communications and CSL
Assuming the 90 days horizon China Communications Services is expected to generate 4.93 times more return on investment than CSL. However, China Communications is 4.93 times more volatile than CSL Limited. It trades about 0.07 of its potential returns per unit of risk. CSL Limited is currently generating about 0.05 per unit of risk. If you would invest 20.00 in China Communications Services on October 11, 2024 and sell it today you would earn a total of 32.00 from holding China Communications Services or generate 160.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. CSL Limited
Performance |
| Timeline |
| China Communications |
| CSL Limited |
China Communications and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and CSL
The main advantage of trading using opposite China Communications and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| China Communications vs. MUTUIONLINE | China Communications vs. PEPTONIC MEDICAL | China Communications vs. CarsalesCom | China Communications vs. SCANDMEDICAL SOLDK 040 |
| CSL vs. Cairo Communication SpA | CSL vs. HUTCHISON TELECOMM | CSL vs. Shenandoah Telecommunications | CSL vs. China Communications Services |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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