Correlation Between UNIVMUSIC GRPADR/050 and CHINA TELECOM

Can any of the company-specific risk be diversified away by investing in both UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 and CHINA TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNIVMUSIC GRPADR050 and CHINA TELECOM H , you can compare the effects of market volatilities on UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 with a short position of CHINA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVMUSIC GRPADR/050 and CHINA TELECOM.

Diversification Opportunities for UNIVMUSIC GRPADR/050 and CHINA TELECOM

0.0

Correlation Coefficient

UNIVMUSIC GRPADR/050  CHINA TELECOM

Pay attention - limited upside

The 3 months correlation between UNIVMUSIC and CHINA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding UNIVMUSIC GRPADR050 and CHINA TELECOM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA TELECOM H and UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR050 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 H has no effect on the direction of UNIVMUSIC GRPADR/050 i.e., UNIVMUSIC GRPADR/050 and CHINA TELECOM go up and down completely randomly.

Pair Corralation between UNIVMUSIC GRPADR/050 and CHINA TELECOM

Assuming the 90 days trading horizon UNIVMUSIC GRPADR/050 is expected to generate 10.1 times less return on investment than CHINA TELECOM. But when comparing it to its historical volatility, UNIVMUSIC GRPADR050 is 1.65 times less risky than CHINA TELECOM. It trades about 0.02 of its potential returns per unit of risk. CHINA TELECOM H is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  25.00  in CHINA TELECOM H on December 5, 2024 and sell it today you would earn a total of  27.00  from holding CHINA TELECOM H or generate 108.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

UNIVMUSIC GRPADR050  vs.  CHINA TELECOM H

UNIVMUSIC GRPADR/050

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVMUSIC GRPADR050 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, UNIVMUSIC GRPADR/050 reported solid returns over the last few months and may actually be approaching a breakup point.

CHINA TELECOM H

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHINA TELECOM H has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, CHINA TELECOM is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with UNIVMUSIC GRPADR/050 and CHINA TELECOM

The main advantage of trading using opposite UNIVMUSIC GRPADR/050 and CHINA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR050 and CHINA TELECOM H 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.