Correlation Between CHINA TELECOM and Ribbon Communications
Can any of the company-specific risk be diversified away by investing in both CHINA TELECOM and Ribbon Communications 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 Ribbon Communications 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 Ribbon Communications, you can compare the effects of market volatilities on CHINA TELECOM and Ribbon Communications 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 Ribbon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TELECOM and Ribbon Communications.
Diversification Opportunities for CHINA TELECOM and Ribbon Communications
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CHINA and Ribbon is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TELECOM H and Ribbon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ribbon Communications 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 Ribbon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ribbon Communications has no effect on the direction of CHINA TELECOM i.e., CHINA TELECOM and Ribbon Communications go up and down completely randomly.
Pair Corralation between CHINA TELECOM and Ribbon Communications
If you would invest 52.00 in CHINA TELECOM H on September 12, 2024 and sell it today you would earn a total of 0.00 from holding CHINA TELECOM H or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA TELECOM H vs. Ribbon Communications
Performance |
| Timeline |
| CHINA TELECOM H |
| Ribbon Communications |
CHINA TELECOM and Ribbon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TELECOM and Ribbon Communications
The main advantage of trading using opposite CHINA TELECOM and Ribbon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TELECOM position performs unexpectedly, Ribbon Communications 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 Ribbon Communications will offset losses from the drop in Ribbon Communications' long position.| CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc |
| Ribbon Communications vs. Superior Plus Corp | Ribbon Communications vs. SIVERS SEMICONDUCTORS AB | Ribbon Communications vs. Norsk Hydro ASA | Ribbon Communications vs. Reliance Steel Aluminum |
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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