Correlation Between China Mobile and Intouch Holdings
Can any of the company-specific risk be diversified away by investing in both China Mobile and Intouch Holdings 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 Intouch Holdings 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 Intouch Holdings Public, you can compare the effects of market volatilities on China Mobile and Intouch Holdings 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 Intouch Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and Intouch Holdings.
Diversification Opportunities for China Mobile and Intouch Holdings
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Intouch is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding China Mobile Limited and Intouch Holdings Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intouch Holdings Public 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 Intouch Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intouch Holdings Public has no effect on the direction of China Mobile i.e., China Mobile and Intouch Holdings go up and down completely randomly.
Pair Corralation between China Mobile and Intouch Holdings
Assuming the 90 days horizon China Mobile Limited is expected to generate 0.03 times more return on investment than Intouch Holdings. However, China Mobile Limited is 34.13 times less risky than Intouch Holdings. It trades about -0.22 of its potential returns per unit of risk. Intouch Holdings Public is currently generating about -0.09 per unit of risk. If you would invest 858.00 in China Mobile Limited on August 28, 2024 and sell it today you would lose (2.00) from holding China Mobile Limited or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Mobile Limited vs. Intouch Holdings Public
Performance |
| Timeline |
| China Mobile Limited |
| Intouch Holdings Public |
China Mobile and Intouch Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Mobile and Intouch Holdings
The main advantage of trading using opposite China Mobile and Intouch Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mobile position performs unexpectedly, Intouch Holdings 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 Intouch Holdings will offset losses from the drop in Intouch Holdings' long position.| China Mobile vs. NIPPON STEEL SPADR | China Mobile vs. 24SEVENOFFICE GROUP AB | China Mobile vs. Boiron SA | China Mobile vs. SCOTT TECHNOLOGY |
| Intouch Holdings vs. TELE2 AB UNSPADR12 | Intouch Holdings vs. Advanced Info Service | Intouch Holdings vs. PLDT Inc | Intouch Holdings vs. Sino Land |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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