Correlation Between Chevron Corp and China Teletech
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and China Teletech 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 Chevron Corp and China Teletech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and China Teletech Holding, you can compare the effects of market volatilities on Chevron Corp and China Teletech 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 Chevron Corp with a short position of China Teletech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and China Teletech.
Diversification Opportunities for Chevron Corp and China Teletech
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chevron and China is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and China Teletech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Teletech Holding and Chevron Corp 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 Chevron Corp are associated (or correlated) with China Teletech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Teletech Holding has no effect on the direction of Chevron Corp i.e., Chevron Corp and China Teletech go up and down completely randomly.
Pair Corralation between Chevron Corp and China Teletech
Considering the 90-day investment horizon Chevron Corp is expected to generate 141.08 times less return on investment than China Teletech. But when comparing it to its historical volatility, Chevron Corp is 74.49 times less risky than China Teletech. It trades about 0.05 of its potential returns per unit of risk. China Teletech Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.11 in China Teletech Holding on September 3, 2024 and sell it today you would lose (0.02) from holding China Teletech Holding or give up 18.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. China Teletech Holding
Performance |
| Timeline |
| Chevron Corp |
| China Teletech Holding |
Chevron Corp and China Teletech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and China Teletech
The main advantage of trading using opposite Chevron Corp and China Teletech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, China Teletech 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 Teletech will offset losses from the drop in China Teletech's long position.The idea behind Chevron Corp and China Teletech Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| China Teletech vs. Oncologix Tech | China Teletech vs. Aqua Power Systems | China Teletech vs. TransAKT | China Teletech vs. China Health Management |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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