Correlation Between China Mobile and China Communications
Can any of the company-specific risk be diversified away by investing in both China Mobile and China 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 China 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 China Communications Services, you can compare the effects of market volatilities on China Mobile and China 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 China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and China Communications.
Diversification Opportunities for China Mobile and China Communications
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Mobile Limited and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China 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 China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of China Mobile i.e., China Mobile and China Communications go up and down completely randomly.
Pair Corralation between China Mobile and China Communications
Assuming the 90 days horizon China Mobile is expected to generate 1.3 times less return on investment than China Communications. But when comparing it to its historical volatility, China Mobile Limited is 1.67 times less risky than China Communications. It trades about 0.1 of its potential returns per unit of risk. China Communications Services is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8.62 in China Communications Services on November 5, 2024 and sell it today you would earn a total of 44.38 from holding China Communications Services or generate 514.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
China Mobile Limited vs. China Communications Services
Performance |
| Timeline |
| China Mobile Limited |
| China Communications |
China Mobile and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mobile and China Communications
The main advantage of trading using opposite China Mobile and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mobile position performs unexpectedly, China 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 China Communications will offset losses from the drop in China Communications' long position.| China Mobile vs. Salesforce | China Mobile vs. SALESFORCE INC CDR | China Mobile vs. H2O Retailing | China Mobile vs. CARSALESCOM |
| China Communications vs. Tokyu Construction Co | China Communications vs. H2O Retailing | China Communications vs. Burlington Stores | China Communications vs. Fast Retailing Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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