Correlation Between TAL Education and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both TAL Education 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 TAL Education and Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAL Education Group and Citic Telecom International, you can compare the effects of market volatilities on TAL Education 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 TAL Education with a short position of Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and Citic Telecom.
Diversification Opportunities for TAL Education and Citic Telecom
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TAL and Citic is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group 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 TAL Education 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 TAL Education Group 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 TAL Education i.e., TAL Education and Citic Telecom go up and down completely randomly.
Pair Corralation between TAL Education and Citic Telecom
Assuming the 90 days trading horizon TAL Education Group is expected to under-perform the Citic Telecom. In addition to that, TAL Education is 1.52 times more volatile than Citic Telecom International. It trades about -0.07 of its total potential returns per unit of risk. Citic Telecom International is currently generating about 0.01 per unit of volatility. If you would invest 26.00 in Citic Telecom International on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Citic Telecom International or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. Citic Telecom International
Performance |
| Timeline |
| TAL Education Group |
| Citic Telecom Intern |
TAL Education and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and Citic Telecom
The main advantage of trading using opposite TAL Education and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education 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.| TAL Education vs. Tradegate AG Wertpapierhandelsbank | TAL Education vs. Webster Financial | TAL Education vs. QBE Insurance Group | TAL Education vs. PKSHA TECHNOLOGY INC |
| Citic Telecom vs. X Fab Silicon | Citic Telecom vs. Silicon Motion Technology | Citic Telecom vs. MACOM Technology Solutions | Citic Telecom vs. Micron Technology |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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