Correlation Between CHINA TELECOM and Derwent London
Can any of the company-specific risk be diversified away by investing in both CHINA TELECOM and Derwent London 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 Derwent London 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 Derwent London PLC, you can compare the effects of market volatilities on CHINA TELECOM and Derwent London 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 Derwent London. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TELECOM and Derwent London.
Diversification Opportunities for CHINA TELECOM and Derwent London
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and Derwent is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TELECOM H and Derwent London PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derwent London PLC 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 Derwent London. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derwent London PLC has no effect on the direction of CHINA TELECOM i.e., CHINA TELECOM and Derwent London go up and down completely randomly.
Pair Corralation between CHINA TELECOM and Derwent London
If you would invest 2,924 in Derwent London PLC on September 13, 2024 and sell it today you would earn a total of 72.00 from holding Derwent London PLC or generate 2.46% 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. Derwent London PLC
Performance |
| Timeline |
| CHINA TELECOM H |
| Derwent London PLC |
CHINA TELECOM and Derwent London Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TELECOM and Derwent London
The main advantage of trading using opposite CHINA TELECOM and Derwent London positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TELECOM position performs unexpectedly, Derwent London 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 Derwent London will offset losses from the drop in Derwent London'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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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