Correlation Between CHINA TELECOM and Boston Beer
Can any of the company-specific risk be diversified away by investing in both CHINA TELECOM and Boston Beer 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 Boston Beer 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 The Boston Beer, you can compare the effects of market volatilities on CHINA TELECOM and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TELECOM and Boston Beer.
Diversification Opportunities for CHINA TELECOM and Boston Beer
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and Boston is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TELECOM H and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of CHINA TELECOM i.e., CHINA TELECOM and Boston Beer go up and down completely randomly.
Pair Corralation between CHINA TELECOM and Boston Beer
Assuming the 90 days trading horizon CHINA TELECOM H is expected to generate 1.72 times more return on investment than Boston Beer. However, CHINA TELECOM is 1.72 times more volatile than The Boston Beer. It trades about 0.1 of its potential returns per unit of risk. The Boston Beer is currently generating about 0.01 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA TELECOM H vs. The Boston Beer
Performance |
| Timeline |
| CHINA TELECOM H |
| Boston Beer |
CHINA TELECOM and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TELECOM and Boston Beer
The main advantage of trading using opposite CHINA TELECOM and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TELECOM position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc |
| Boston Beer vs. Gol Intelligent Airlines | Boston Beer vs. Sunny Optical Technology | Boston Beer vs. DXC Technology Co | Boston Beer vs. United Airlines Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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