Correlation Between Intel and China Mobile
Can any of the company-specific risk be diversified away by investing in both Intel 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 Intel and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and China Life Insurance, you can compare the effects of market volatilities on Intel 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 Intel with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and China Mobile.
Diversification Opportunities for Intel and China Mobile
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intel and China is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Intel and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance and Intel 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 Intel 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 Life Insurance has no effect on the direction of Intel i.e., Intel and China Mobile go up and down completely randomly.
Pair Corralation between Intel and China Mobile
Assuming the 90 days trading horizon Intel is expected to under-perform the China Mobile. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 1.52 times less risky than China Mobile. The stock trades about -0.03 of its potential returns per unit of risk. The China Life Insurance is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 59.00 in China Life Insurance on September 12, 2024 and sell it today you would earn a total of 135.00 from holding China Life Insurance or generate 228.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. China Life Insurance
Performance |
| Timeline |
| Intel |
| China Life Insurance |
Intel and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and China Mobile
The main advantage of trading using opposite Intel and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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.| Intel vs. Perdoceo Education | Intel vs. DATANG INTL POW | Intel vs. CHINA EDUCATION GROUP | Intel vs. Datang International Power |
| China Mobile vs. Jacquet Metal Service | China Mobile vs. Texas Roadhouse | China Mobile vs. Perseus Mining Limited | China Mobile vs. Evolution Mining Limited |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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