Correlation Between Sartorius Stedim and CITIC Telecom

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

By analyzing existing cross correlation between Sartorius Stedim Biotech and CITIC Telecom International, you can compare the effects of market volatilities on Sartorius Stedim and CITIC 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 Sartorius Stedim with a short position of CITIC Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sartorius Stedim and CITIC Telecom.

Diversification Opportunities for Sartorius Stedim and CITIC Telecom

-0.07

Correlation Coefficient

Sartorius Stedim  CITIC Telecom

Good diversification

The 3 months correlation between Sartorius and CITIC is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sartorius Stedim Biotech and CITIC Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Telecom Intern and Sartorius Stedim 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 Sartorius Stedim Biotech are associated (or correlated) with CITIC Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Telecom Intern has no effect on the direction of Sartorius Stedim i.e., Sartorius Stedim and CITIC Telecom go up and down completely randomly.

Pair Corralation between Sartorius Stedim and CITIC Telecom

Assuming the 90 days trading horizon Sartorius Stedim Biotech is expected to generate 0.73 times more return on investment than CITIC Telecom. However, Sartorius Stedim Biotech is 1.36 times less risky than CITIC Telecom. It trades about 0.0 of its potential returns per unit of risk. CITIC Telecom International is currently generating about -0.01 per unit of risk. If you would invest  20,030  in Sartorius Stedim Biotech on October 21, 2024 and sell it today you would lose (230.00) from holding Sartorius Stedim Biotech or give up 1.15% of portfolio value over 90 days.

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

Sartorius Stedim Biotech  vs.  CITIC Telecom International

Sartorius Stedim Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sartorius Stedim Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sartorius Stedim is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CITIC Telecom Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC Telecom International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CITIC Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sartorius Stedim and CITIC Telecom

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

The idea behind Sartorius Stedim Biotech and CITIC Telecom International 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.