Correlation Between Deutsche Telekom and China Mobile
Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom and China Mobile 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 Deutsche Telekom and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Telekom AG and China Mobile Limited, you can compare the effects of market volatilities on Deutsche Telekom and China Mobile 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 Deutsche Telekom with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and China Mobile.
Diversification Opportunities for Deutsche Telekom and China Mobile
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deutsche and China is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and China Mobile Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile Limited and Deutsche Telekom 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 Deutsche Telekom AG are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile Limited has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and China Mobile go up and down completely randomly.
Pair Corralation between Deutsche Telekom and China Mobile
Assuming the 90 days trading horizon Deutsche Telekom is expected to generate 3.78 times less return on investment than China Mobile. But when comparing it to its historical volatility, Deutsche Telekom AG is 2.37 times less risky than China Mobile. It trades about 0.06 of its potential returns per unit of risk. China Mobile Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 166.00 in China Mobile Limited on October 31, 2024 and sell it today you would earn a total of 690.00 from holding China Mobile Limited or generate 415.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Telekom AG vs. China Mobile Limited
Performance |
| Timeline |
| Deutsche Telekom |
| China Mobile Limited |
Deutsche Telekom and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Telekom and China Mobile
The main advantage of trading using opposite Deutsche Telekom and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom position performs unexpectedly, China Mobile 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 Mobile will offset losses from the drop in China Mobile's long position.| Deutsche Telekom vs. GAMESTOP | Deutsche Telekom vs. MidCap Financial Investment | Deutsche Telekom vs. Keck Seng Investments | Deutsche Telekom vs. GigaMedia |
| China Mobile vs. THRACE PLASTICS | China Mobile vs. PATTIES FOODS | China Mobile vs. US FOODS HOLDING | China Mobile vs. Sumitomo Rubber Industries |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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