Correlation Between Infrastrutture Wireless and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both Infrastrutture Wireless 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 Infrastrutture Wireless and Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infrastrutture Wireless Italiane and Citic Telecom International, you can compare the effects of market volatilities on Infrastrutture Wireless 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 Infrastrutture Wireless with a short position of Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infrastrutture Wireless and Citic Telecom.
Diversification Opportunities for Infrastrutture Wireless and Citic Telecom
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Infrastrutture and Citic is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Infrastrutture Wireless Italia 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 Infrastrutture Wireless 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 Infrastrutture Wireless Italiane 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 Infrastrutture Wireless i.e., Infrastrutture Wireless and Citic Telecom go up and down completely randomly.
Pair Corralation between Infrastrutture Wireless and Citic Telecom
Assuming the 90 days horizon Infrastrutture Wireless Italiane is expected to under-perform the Citic Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Infrastrutture Wireless Italiane is 3.01 times less risky than Citic Telecom. The stock trades about -0.31 of its potential returns per unit of risk. The Citic Telecom International is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Citic Telecom International on November 27, 2024 and sell it today you would earn a total of 3.00 from holding Citic Telecom International or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infrastrutture Wireless Italia vs. Citic Telecom International
Performance |
| Timeline |
| Infrastrutture Wireless |
| Citic Telecom Intern |
Infrastrutture Wireless and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infrastrutture Wireless and Citic Telecom
The main advantage of trading using opposite Infrastrutture Wireless and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infrastrutture Wireless 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 Infrastrutture Wireless Italiane 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.
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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