Correlation Between China Communications and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both China Communications and Deutsche Telekom 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 Deutsche Telekom 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 Deutsche Telekom AG, you can compare the effects of market volatilities on China Communications and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Deutsche Telekom.
Diversification Opportunities for China Communications and Deutsche Telekom
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Deutsche is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of China Communications i.e., China Communications and Deutsche Telekom go up and down completely randomly.
Pair Corralation between China Communications and Deutsche Telekom
Assuming the 90 days horizon China Communications is expected to generate 36.9 times less return on investment than Deutsche Telekom. In addition to that, China Communications is 1.42 times more volatile than Deutsche Telekom AG. It trades about 0.01 of its total potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.36 per unit of volatility. If you would invest 2,802 in Deutsche Telekom AG on September 2, 2024 and sell it today you would earn a total of 226.00 from holding Deutsche Telekom AG or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. Deutsche Telekom AG
Performance |
| Timeline |
| China Communications |
| Deutsche Telekom |
China Communications and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Deutsche Telekom
The main advantage of trading using opposite China Communications and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| China Communications vs. Deutsche Telekom AG | China Communications vs. Superior Plus Corp | China Communications vs. NMI Holdings | China Communications vs. Origin Agritech |
| Deutsche Telekom vs. REGAL ASIAN INVESTMENTS | Deutsche Telekom vs. VIVA WINE GROUP | Deutsche Telekom vs. New Residential Investment | Deutsche Telekom vs. ECHO INVESTMENT ZY |
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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