Correlation Between Gansu Huangtai and China Telecom

Can any of the company-specific risk be diversified away by investing in both Gansu Huangtai and China 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 Gansu Huangtai and China Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gansu Huangtai Wine marketing and China Telecom Corp, you can compare the effects of market volatilities on Gansu Huangtai and China 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 Gansu Huangtai with a short position of China Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gansu Huangtai and China Telecom.

Diversification Opportunities for Gansu Huangtai and China Telecom

-0.78

Correlation Coefficient

Gansu Huangtai  China Telecom

Pay attention - limited upside

The 3 months correlation between Gansu and China is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Gansu Huangtai Wine marketing and China Telecom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Telecom Corp and Gansu Huangtai 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 Gansu Huangtai Wine marketing are associated (or correlated) with China Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Telecom Corp has no effect on the direction of Gansu Huangtai i.e., Gansu Huangtai and China Telecom go up and down completely randomly.

Pair Corralation between Gansu Huangtai and China Telecom

Assuming the 90 days trading horizon Gansu Huangtai Wine marketing is expected to under-perform the China Telecom. In addition to that, Gansu Huangtai is 1.46 times more volatile than China Telecom Corp. It trades about -0.06 of its total potential returns per unit of risk. China Telecom Corp is currently generating about 0.05 per unit of volatility. If you would invest  721.00  in China Telecom Corp on December 25, 2024 and sell it today you would earn a total of  40.00  from holding China Telecom Corp or generate 5.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Gansu Huangtai Wine marketing  vs.  China Telecom Corp

Gansu Huangtai Wine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gansu Huangtai Wine marketing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

China Telecom Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Telecom Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Telecom may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gansu Huangtai and China Telecom

The main advantage of trading using opposite Gansu Huangtai and China Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gansu Huangtai position performs unexpectedly, China 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 China Telecom will offset losses from the drop in China Telecom's long position.

The idea behind Gansu Huangtai Wine marketing and China Telecom Corp 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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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.