Correlation Between Glencore PLC and CHINA TELECOM

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

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

Diversification Opportunities for Glencore PLC and CHINA TELECOM

0.64

Correlation Coefficient

Glencore PLC  CHINA TELECOM

Poor diversification

The 3 months correlation between Glencore and CHINA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC 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 Glencore PLC 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 Glencore PLC 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 Glencore PLC i.e., Glencore PLC and CHINA TELECOM go up and down completely randomly.

Pair Corralation between Glencore PLC and CHINA TELECOM

If you would invest  429.00  in Glencore PLC on October 20, 2024 and sell it today you would earn a total of  26.00  from holding Glencore PLC or generate 6.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Glencore PLC  vs.  CHINA TELECOM H

Glencore PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CHINA TELECOM H

Risk-Adjusted Performance

0 of 100

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Glencore PLC and CHINA TELECOM

The main advantage of trading using opposite Glencore PLC and CHINA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC 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 Glencore PLC 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.