Correlation Between Zhongtong Guomai and CICT Mobile

Can any of the company-specific risk be diversified away by investing in both Zhongtong Guomai and CICT Mobile 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 Zhongtong Guomai and CICT Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhongtong Guomai Communication and CICT Mobile Communication, you can compare the effects of market volatilities on Zhongtong Guomai and CICT Mobile 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 Zhongtong Guomai with a short position of CICT Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongtong Guomai and CICT Mobile.

Diversification Opportunities for Zhongtong Guomai and CICT Mobile

0.67

Correlation Coefficient

Zhongtong Guomai  CICT Mobile

Poor diversification

The 3 months correlation between Zhongtong and CICT is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Zhongtong Guomai Communication and CICT Mobile Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CICT Mobile Communication and Zhongtong Guomai 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 Zhongtong Guomai Communication are associated (or correlated) with CICT Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CICT Mobile Communication has no effect on the direction of Zhongtong Guomai i.e., Zhongtong Guomai and CICT Mobile go up and down completely randomly.

Pair Corralation between Zhongtong Guomai and CICT Mobile

Assuming the 90 days trading horizon Zhongtong Guomai Communication is expected to under-perform the CICT Mobile. In addition to that, Zhongtong Guomai is 1.42 times more volatile than CICT Mobile Communication. It trades about -0.2 of its total potential returns per unit of risk. CICT Mobile Communication is currently generating about -0.12 per unit of volatility. If you would invest  710.00  in CICT Mobile Communication on September 10, 2024 and sell it today you would lose (52.00) from holding CICT Mobile Communication or give up 7.32% of portfolio value over 90 days.

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

Zhongtong Guomai Communication  vs.  CICT Mobile Communication

Zhongtong Guomai Com

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zhongtong Guomai Communication are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhongtong Guomai sustained solid returns over the last few months and may actually be approaching a breakup point.

CICT Mobile Communication

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CICT Mobile Communication are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CICT Mobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zhongtong Guomai and CICT Mobile

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

The idea behind Zhongtong Guomai Communication and CICT Mobile Communication 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.