Correlation Between UNITED UTILITIES and China Communications
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and China Communications 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 UTILITIES and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED UTILITIES GR and China Communications Services, you can compare the effects of market volatilities on UNITED UTILITIES and China Communications 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 UTILITIES with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and China Communications.
Diversification Opportunities for UNITED UTILITIES and China Communications
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UNITED and China is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and UNITED UTILITIES 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 UTILITIES GR are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and China Communications go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and China Communications
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to under-perform the China Communications. In addition to that, UNITED UTILITIES is 1.65 times more volatile than China Communications Services. It trades about -0.04 of its total potential returns per unit of risk. China Communications Services is currently generating about 0.08 per unit of volatility. If you would invest 52.00 in China Communications Services on November 7, 2024 and sell it today you would earn a total of 1.00 from holding China Communications Services or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. China Communications Services
Performance |
| Timeline |
| UNITED UTILITIES |
| China Communications |
UNITED UTILITIES and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and China Communications
The main advantage of trading using opposite UNITED UTILITIES and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, China Communications 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 Communications will offset losses from the drop in China Communications' long position.| UNITED UTILITIES vs. Laureate Education | UNITED UTILITIES vs. IDP EDUCATION LTD | UNITED UTILITIES vs. CAREER EDUCATION | UNITED UTILITIES vs. Delta Electronics Public |
| China Communications vs. REMEDY ENTERTAINMENT OYJ | China Communications vs. Nexstar Media Group | China Communications vs. The Home Depot | China Communications vs. American Homes 4 |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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