Correlation Between China Mobile and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both China Mobile and Iridium Communications 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 Mobile and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Mobile Limited and Iridium Communications, you can compare the effects of market volatilities on China Mobile and Iridium Communications 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 Mobile with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and Iridium Communications.
Diversification Opportunities for China Mobile and Iridium Communications
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Iridium is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding China Mobile Limited and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and China Mobile 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 Mobile Limited are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of China Mobile i.e., China Mobile and Iridium Communications go up and down completely randomly.
Pair Corralation between China Mobile and Iridium Communications
If you would invest 2,841 in Iridium Communications on September 12, 2024 and sell it today you would earn a total of 87.00 from holding Iridium Communications or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Mobile Limited vs. Iridium Communications
Performance |
| Timeline |
| China Mobile Limited |
| Iridium Communications |
China Mobile and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mobile and Iridium Communications
The main advantage of trading using opposite China Mobile and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mobile position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| China Mobile vs. GameStop Corp | China Mobile vs. SHIN ETSU CHEMICAL | China Mobile vs. Mitsubishi Gas Chemical | China Mobile vs. PENN NATL GAMING |
| Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. SIVERS SEMICONDUCTORS AB | Iridium Communications vs. Norsk Hydro ASA | Iridium Communications vs. Reliance Steel Aluminum |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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