Correlation Between ORIX and CHINA TELECOM
Can any of the company-specific risk be diversified away by investing in both ORIX and CHINA 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 ORIX and CHINA TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORIX Corporation and CHINA TELECOM H , you can compare the effects of market volatilities on ORIX and CHINA 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 ORIX with a short position of CHINA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORIX and CHINA TELECOM.
Diversification Opportunities for ORIX and CHINA TELECOM
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ORIX and CHINA is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ORIX Corp. and CHINA TELECOM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA TELECOM H and ORIX 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 ORIX Corporation are associated (or correlated) with CHINA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA TELECOM H has no effect on the direction of ORIX i.e., ORIX and CHINA TELECOM go up and down completely randomly.
Pair Corralation between ORIX and CHINA TELECOM
Assuming the 90 days horizon ORIX is expected to generate 4.63 times less return on investment than CHINA TELECOM. But when comparing it to its historical volatility, ORIX Corporation is 2.22 times less risky than CHINA TELECOM. It trades about 0.05 of its potential returns per unit of risk. CHINA TELECOM H is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15.00 in CHINA TELECOM H on September 12, 2024 and sell it today you would earn a total of 37.00 from holding CHINA TELECOM H or generate 246.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORIX Corp. vs. CHINA TELECOM H
Performance |
| Timeline |
| ORIX |
| CHINA TELECOM H |
ORIX and CHINA TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORIX and CHINA TELECOM
The main advantage of trading using opposite ORIX and CHINA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORIX position performs unexpectedly, CHINA 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 CHINA TELECOM will offset losses from the drop in CHINA TELECOM's long position.| ORIX vs. XLMedia PLC | ORIX vs. PLAYTIKA HOLDING DL 01 | ORIX vs. JD SPORTS FASH | ORIX vs. Tencent Music Entertainment |
| CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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