Correlation Between China Datang and COMBA TELECOM
Can any of the company-specific risk be diversified away by investing in both China Datang and COMBA 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 China Datang and COMBA TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Datang and COMBA TELECOM SYST, you can compare the effects of market volatilities on China Datang and COMBA 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 China Datang with a short position of COMBA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Datang and COMBA TELECOM.
Diversification Opportunities for China Datang and COMBA TELECOM
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and COMBA is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding China Datang and COMBA TELECOM SYST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMBA TELECOM SYST and China Datang 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 Datang are associated (or correlated) with COMBA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMBA TELECOM SYST has no effect on the direction of China Datang i.e., China Datang and COMBA TELECOM go up and down completely randomly.
Pair Corralation between China Datang and COMBA TELECOM
Assuming the 90 days horizon China Datang is expected to generate 1.08 times less return on investment than COMBA TELECOM. But when comparing it to its historical volatility, China Datang is 1.53 times less risky than COMBA TELECOM. It trades about 0.11 of its potential returns per unit of risk. COMBA TELECOM SYST is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 12.00 in COMBA TELECOM SYST on October 30, 2024 and sell it today you would earn a total of 1.00 from holding COMBA TELECOM SYST or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Datang vs. COMBA TELECOM SYST
Performance |
| Timeline |
| China Datang |
| COMBA TELECOM SYST |
China Datang and COMBA TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Datang and COMBA TELECOM
The main advantage of trading using opposite China Datang and COMBA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Datang position performs unexpectedly, COMBA 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 COMBA TELECOM will offset losses from the drop in COMBA TELECOM's long position.| China Datang vs. Broadridge Financial Solutions | China Datang vs. COPLAND ROAD CAPITAL | China Datang vs. CanSino Biologics | China Datang vs. SAN MIGUEL BREWERY |
| COMBA TELECOM vs. Summit Hotel Properties | COMBA TELECOM vs. ARDAGH METAL PACDL 0001 | COMBA TELECOM vs. Meli Hotels International | COMBA TELECOM vs. AMAG Austria Metall |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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