Correlation Between China Teletech and United Fire
Can any of the company-specific risk be diversified away by investing in both China Teletech and United Fire 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 Teletech and United Fire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Teletech Holding and United Fire Group, you can compare the effects of market volatilities on China Teletech and United Fire 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 Teletech with a short position of United Fire. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Teletech and United Fire.
Diversification Opportunities for China Teletech and United Fire
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and United is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding China Teletech Holding and United Fire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Fire Group and China Teletech 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 Teletech Holding are associated (or correlated) with United Fire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Fire Group has no effect on the direction of China Teletech i.e., China Teletech and United Fire go up and down completely randomly.
Pair Corralation between China Teletech and United Fire
Given the investment horizon of 90 days China Teletech is expected to generate 1.18 times less return on investment than United Fire. In addition to that, China Teletech is 6.87 times more volatile than United Fire Group. It trades about 0.05 of its total potential returns per unit of risk. United Fire Group is currently generating about 0.42 per unit of volatility. If you would invest 1,932 in United Fire Group on September 3, 2024 and sell it today you would earn a total of 1,128 from holding United Fire Group or generate 58.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Teletech Holding vs. United Fire Group
Performance |
| Timeline |
| China Teletech Holding |
| United Fire Group |
China Teletech and United Fire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Teletech and United Fire
The main advantage of trading using opposite China Teletech and United Fire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Teletech position performs unexpectedly, United Fire 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 United Fire will offset losses from the drop in United Fire's long position.| China Teletech vs. Oncologix Tech | China Teletech vs. Aqua Power Systems | China Teletech vs. TransAKT | China Teletech vs. China Health Management |
| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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