Correlation Between DISTRICT METALS and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both DISTRICT METALS and Citic 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 DISTRICT METALS and Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DISTRICT METALS and Citic Telecom International, you can compare the effects of market volatilities on DISTRICT METALS and Citic 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 DISTRICT METALS with a short position of Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of DISTRICT METALS and Citic Telecom.
Diversification Opportunities for DISTRICT METALS and Citic Telecom
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DISTRICT and Citic is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding DISTRICT METALS and Citic Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Telecom Intern and DISTRICT METALS 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 DISTRICT METALS are associated (or correlated) with Citic Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Telecom Intern has no effect on the direction of DISTRICT METALS i.e., DISTRICT METALS and Citic Telecom go up and down completely randomly.
Pair Corralation between DISTRICT METALS and Citic Telecom
Assuming the 90 days trading horizon DISTRICT METALS is expected to generate 1.27 times less return on investment than Citic Telecom. But when comparing it to its historical volatility, DISTRICT METALS is 1.46 times less risky than Citic Telecom. It trades about 0.08 of its potential returns per unit of risk. Citic Telecom International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Citic Telecom International on September 20, 2024 and sell it today you would earn a total of 16.00 from holding Citic Telecom International or generate 145.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DISTRICT METALS vs. Citic Telecom International
Performance |
| Timeline |
| DISTRICT METALS |
| Citic Telecom Intern |
DISTRICT METALS and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DISTRICT METALS and Citic Telecom
The main advantage of trading using opposite DISTRICT METALS and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DISTRICT METALS position performs unexpectedly, Citic 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 Citic Telecom will offset losses from the drop in Citic Telecom's long position.| DISTRICT METALS vs. American Lithium Corp | DISTRICT METALS vs. ADRIATIC METALS LS 013355 | DISTRICT METALS vs. Superior Plus Corp | DISTRICT METALS vs. SIVERS SEMICONDUCTORS AB |
| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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