Correlation Between Retail Estates and China Mobile
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and China Life Insurance, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and China Mobile.
Diversification Opportunities for Retail Estates and China Mobile
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Retail and China is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV 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 Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and China Mobile go up and down completely randomly.
Pair Corralation between Retail Estates and China Mobile
Assuming the 90 days horizon Retail Estates NV is expected to generate 0.58 times more return on investment than China Mobile. However, Retail Estates NV is 1.72 times less risky than China Mobile. It trades about 0.17 of its potential returns per unit of risk. China Life Insurance is currently generating about -0.37 per unit of risk. If you would invest 5,800 in Retail Estates NV on October 9, 2024 and sell it today you would earn a total of 160.00 from holding Retail Estates NV or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. China Life Insurance
Performance |
| Timeline |
| Retail Estates NV |
| China Life Insurance |
Retail Estates and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and China Mobile
The main advantage of trading using opposite Retail Estates and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Superior Plus Corp | Retail Estates vs. NMI Holdings | Retail Estates vs. SIVERS SEMICONDUCTORS AB | Retail Estates vs. Talanx AG |
| China Mobile vs. Ebro Foods SA | China Mobile vs. GWILLI FOOD | China Mobile vs. EBRO FOODS | China Mobile vs. SEALED AIR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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