Correlation Between China Mobile and ATT
Can any of the company-specific risk be diversified away by investing in both China Mobile and ATT 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 ATT 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 ATT Inc, you can compare the effects of market volatilities on China Mobile and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and ATT.
Diversification Opportunities for China Mobile and ATT
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and ATT is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding China Mobile Limited and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of China Mobile i.e., China Mobile and ATT go up and down completely randomly.
Pair Corralation between China Mobile and ATT
Assuming the 90 days horizon China Mobile Limited is expected to generate 2.59 times more return on investment than ATT. However, China Mobile is 2.59 times more volatile than ATT Inc. It trades about 0.09 of its potential returns per unit of risk. ATT Inc is currently generating about 0.15 per unit of risk. If you would invest 623.00 in China Mobile Limited on October 19, 2024 and sell it today you would earn a total of 233.00 from holding China Mobile Limited or generate 37.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Mobile Limited vs. ATT Inc
Performance |
| Timeline |
| China Mobile Limited |
| ATT Inc |
China Mobile and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mobile and ATT
The main advantage of trading using opposite China Mobile and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mobile position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| China Mobile vs. T Mobile | China Mobile vs. Verizon Communications | China Mobile vs. ATT Inc | China Mobile vs. ATT Inc |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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