Correlation Between Dairy Farm and CHINA TELECOM
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and CHINA TELECOM 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 Dairy Farm and CHINA TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and CHINA TELECOM H , you can compare the effects of market volatilities on Dairy Farm and CHINA TELECOM 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 Dairy Farm with a short position of CHINA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and CHINA TELECOM.
Diversification Opportunities for Dairy Farm and CHINA TELECOM
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dairy and CHINA is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and CHINA TELECOM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA TELECOM H and Dairy Farm 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 Dairy Farm International are associated (or correlated) with CHINA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA TELECOM H has no effect on the direction of Dairy Farm i.e., Dairy Farm and CHINA TELECOM go up and down completely randomly.
Pair Corralation between Dairy Farm and CHINA TELECOM
Assuming the 90 days trading horizon Dairy Farm International is expected to under-perform the CHINA TELECOM. But the stock apears to be less risky and, when comparing its historical volatility, Dairy Farm International is 1.51 times less risky than CHINA TELECOM. The stock trades about 0.0 of its potential returns per unit of risk. The CHINA TELECOM H is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 10.00 in CHINA TELECOM H on September 20, 2024 and sell it today you would earn a total of 42.00 from holding CHINA TELECOM H or generate 420.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. CHINA TELECOM H
Performance |
| Timeline |
| Dairy Farm International |
| CHINA TELECOM H |
Dairy Farm and CHINA TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and CHINA TELECOM
The main advantage of trading using opposite Dairy Farm and CHINA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, CHINA TELECOM 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 TELECOM will offset losses from the drop in CHINA TELECOM's long position.| Dairy Farm vs. Loblaw Companies Limited | Dairy Farm vs. Superior Plus Corp | Dairy Farm vs. SIVERS SEMICONDUCTORS AB | Dairy Farm vs. Norsk Hydro ASA |
| CHINA TELECOM vs. Choice Hotels International | CHINA TELECOM vs. MELIA HOTELS | CHINA TELECOM vs. InterContinental Hotels Group | CHINA TELECOM vs. INTERCONT HOTELS |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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