Correlation Between Dymatic Chemicals and China Telecom

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

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

Diversification Opportunities for Dymatic Chemicals and China Telecom

0.62

Correlation Coefficient

Dymatic Chemicals  China Telecom

Poor diversification

The 3 months correlation between Dymatic and China is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dymatic Chemicals 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 Dymatic Chemicals 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 Dymatic Chemicals 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 Dymatic Chemicals i.e., Dymatic Chemicals and China Telecom go up and down completely randomly.

Pair Corralation between Dymatic Chemicals and China Telecom

Assuming the 90 days trading horizon Dymatic Chemicals is expected to generate 0.71 times more return on investment than China Telecom. However, Dymatic Chemicals is 1.41 times less risky than China Telecom. It trades about 0.11 of its potential returns per unit of risk. China Telecom Corp is currently generating about 0.05 per unit of risk. If you would invest  580.00  in Dymatic Chemicals on December 25, 2024 and sell it today you would earn a total of  58.00  from holding Dymatic Chemicals or generate 10.0% return on investment over 90 days.

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

Dymatic Chemicals  vs.  China Telecom Corp

Dymatic Chemicals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dymatic Chemicals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dymatic Chemicals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

China Telecom Corp

Risk-Adjusted Performance

Modest

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 Dymatic Chemicals and China Telecom

The main advantage of trading using opposite Dymatic Chemicals and China Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dymatic Chemicals 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 Dymatic Chemicals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.