Correlation Between PlayNitride and China Mobile

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

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

Diversification Opportunities for PlayNitride and China Mobile

-0.73

Correlation Coefficient

PlayNitride  China Mobile

Pay attention - limited upside

The 3 months correlation between PlayNitride and China is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding PlayNitride and China Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile and PlayNitride 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 PlayNitride are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile has no effect on the direction of PlayNitride i.e., PlayNitride and China Mobile go up and down completely randomly.

Pair Corralation between PlayNitride and China Mobile

Assuming the 90 days trading horizon PlayNitride is expected to generate 4.69 times more return on investment than China Mobile. However, PlayNitride is 4.69 times more volatile than China Mobile. It trades about 0.09 of its potential returns per unit of risk. China Mobile is currently generating about -0.1 per unit of risk. If you would invest  15,450  in PlayNitride on September 27, 2024 and sell it today you would earn a total of  2,250  from holding PlayNitride or generate 14.56% return on investment over 90 days.

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

PlayNitride  vs.  China Mobile

PlayNitride

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PlayNitride are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, PlayNitride showed solid returns over the last few months and may actually be approaching a breakup point.

China Mobile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Mobile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PlayNitride and China Mobile

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

The idea behind PlayNitride and China Mobile 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.