Correlation Between Suzhou Novoprotein and China Telecom

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

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

Diversification Opportunities for Suzhou Novoprotein and China Telecom

-0.4

Correlation Coefficient

Suzhou Novoprotein  China Telecom

Very good diversification

The 3 months correlation between Suzhou and China is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Suzhou Novoprotein Scientific 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 Suzhou Novoprotein 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 Suzhou Novoprotein Scientific 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 Suzhou Novoprotein i.e., Suzhou Novoprotein and China Telecom go up and down completely randomly.

Pair Corralation between Suzhou Novoprotein and China Telecom

Assuming the 90 days trading horizon Suzhou Novoprotein Scientific is expected to under-perform the China Telecom. In addition to that, Suzhou Novoprotein is 1.12 times more volatile than China Telecom Corp. It trades about -0.57 of its total potential returns per unit of risk. China Telecom Corp is currently generating about 0.1 per unit of volatility. If you would invest  682.00  in China Telecom Corp on October 13, 2024 and sell it today you would earn a total of  16.00  from holding China Telecom Corp or generate 2.35% return on investment over 90 days.

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

Suzhou Novoprotein Scientific  vs.  China Telecom Corp

Suzhou Novoprotein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suzhou Novoprotein Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

China Telecom Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days China Telecom Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, China Telecom may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Suzhou Novoprotein and China Telecom

The main advantage of trading using opposite Suzhou Novoprotein and China Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suzhou Novoprotein 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 Suzhou Novoprotein Scientific 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.