Correlation Between CHINA TELECOM and Apple
Can any of the company-specific risk be diversified away by investing in both CHINA TELECOM and Apple 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 CHINA TELECOM and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA TELECOM H and Apple Inc, you can compare the effects of market volatilities on CHINA TELECOM and Apple 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 CHINA TELECOM with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TELECOM and Apple.
Diversification Opportunities for CHINA TELECOM and Apple
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between CHINA and Apple is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TELECOM H and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and CHINA TELECOM 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 CHINA TELECOM H are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of CHINA TELECOM i.e., CHINA TELECOM and Apple go up and down completely randomly.
Pair Corralation between CHINA TELECOM and Apple
Assuming the 90 days trading horizon CHINA TELECOM H is expected to generate 2.68 times more return on investment than Apple. However, CHINA TELECOM is 2.68 times more volatile than Apple Inc. It trades about 0.1 of its potential returns per unit of risk. Apple Inc is currently generating about 0.1 per unit of risk. If you would invest 11.00 in CHINA TELECOM H on September 13, 2024 and sell it today you would earn a total of 41.00 from holding CHINA TELECOM H or generate 372.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CHINA TELECOM H vs. Apple Inc
Performance |
| Timeline |
| CHINA TELECOM H |
| Apple Inc |
CHINA TELECOM and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TELECOM and Apple
The main advantage of trading using opposite CHINA TELECOM and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TELECOM position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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