Correlation Between Capri Holdings and China Tower
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and China Tower 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 Capri Holdings and China Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and China Tower, you can compare the effects of market volatilities on Capri Holdings and China Tower 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 Capri Holdings with a short position of China Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and China Tower.
Diversification Opportunities for Capri Holdings and China Tower
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capri and China is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and China Tower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Tower and Capri Holdings 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 Capri Holdings are associated (or correlated) with China Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Tower has no effect on the direction of Capri Holdings i.e., Capri Holdings and China Tower go up and down completely randomly.
Pair Corralation between Capri Holdings and China Tower
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the China Tower. But the stock apears to be less risky and, when comparing its historical volatility, Capri Holdings is 64.38 times less risky than China Tower. The stock trades about -0.31 of its potential returns per unit of risk. The China Tower is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 14.00 in China Tower on November 28, 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 | 90.48% |
| Values | Daily Returns |
Capri Holdings vs. China Tower
Performance |
| Timeline |
| Capri Holdings |
| China Tower |
Capri Holdings and China Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and China Tower
The main advantage of trading using opposite Capri Holdings and China Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, China Tower 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 China Tower will offset losses from the drop in China Tower's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| China Tower vs. Singapore Telecommunications Limited | China Tower vs. Vodafone Group PLC | China Tower vs. PT Indosat Tbk | China Tower vs. KDDI Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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