Correlation Between United Internet and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both United Internet 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 United Internet and Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and Citic Telecom International, you can compare the effects of market volatilities on United Internet 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 United Internet with a short position of Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Citic Telecom.
Diversification Opportunities for United Internet and Citic Telecom
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Citic is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG 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 United Internet 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 United Internet AG 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 United Internet i.e., United Internet and Citic Telecom go up and down completely randomly.
Pair Corralation between United Internet and Citic Telecom
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Citic Telecom. But the stock apears to be less risky and, when comparing its historical volatility, United Internet AG is 3.21 times less risky than Citic Telecom. The stock trades about 0.0 of its potential returns per unit of risk. The Citic Telecom International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3.91 in Citic Telecom International on September 5, 2024 and sell it today you would earn a total of 23.09 from holding Citic Telecom International or generate 590.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
United Internet AG vs. Citic Telecom International
Performance |
| Timeline |
| United Internet AG |
| Citic Telecom Intern |
United Internet and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and Citic Telecom
The main advantage of trading using opposite United Internet and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet 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.The idea behind United Internet AG and Citic Telecom International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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