Correlation Between TRAVEL LEISURE and CHINA TELECOM
Can any of the company-specific risk be diversified away by investing in both TRAVEL LEISURE 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 TRAVEL LEISURE and CHINA TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and CHINA TELECOM H , you can compare the effects of market volatilities on TRAVEL LEISURE 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 TRAVEL LEISURE with a short position of CHINA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL LEISURE and CHINA TELECOM.
Diversification Opportunities for TRAVEL LEISURE and CHINA TELECOM
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRAVEL and CHINA is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 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 TRAVEL LEISURE 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 TRAVEL LEISURE DL 01 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 TRAVEL LEISURE i.e., TRAVEL LEISURE and CHINA TELECOM go up and down completely randomly.
Pair Corralation between TRAVEL LEISURE and CHINA TELECOM
Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 1.31 times more return on investment than CHINA TELECOM. However, TRAVEL LEISURE is 1.31 times more volatile than CHINA TELECOM H . It trades about 0.19 of its potential returns per unit of risk. CHINA TELECOM H is currently generating about 0.03 per unit of risk. If you would invest 4,020 in TRAVEL LEISURE DL 01 on September 26, 2024 and sell it today you would earn a total of 840.00 from holding TRAVEL LEISURE DL 01 or generate 20.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRAVEL LEISURE DL 01 vs. CHINA TELECOM H
Performance |
| Timeline |
| TRAVEL LEISURE DL |
| CHINA TELECOM H |
TRAVEL LEISURE and CHINA TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRAVEL LEISURE and CHINA TELECOM
The main advantage of trading using opposite TRAVEL LEISURE and CHINA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL LEISURE 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.| TRAVEL LEISURE vs. TRIPCOM GROUP DL 00125 | TRAVEL LEISURE vs. TUI AG | TRAVEL LEISURE vs. TripAdvisor | TRAVEL LEISURE vs. MakeMyTrip Limited |
| CHINA TELECOM vs. TRAVEL LEISURE DL 01 | CHINA TELECOM vs. Goodyear Tire Rubber | CHINA TELECOM vs. ANTA SPORTS PRODUCT | CHINA TELECOM vs. Rayonier Advanced Materials |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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