Correlation Between CITIC Telecom and GAMES OPERATORS

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

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

Diversification Opportunities for CITIC Telecom and GAMES OPERATORS

0.59

Correlation Coefficient

CITIC Telecom  GAMES OPERATORS

Very weak diversification

The 3 months correlation between CITIC and GAMES is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and GAMES OPERATORS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMES OPERATORS SA and CITIC Telecom 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 CITIC Telecom International are associated (or correlated) with GAMES OPERATORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMES OPERATORS SA has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and GAMES OPERATORS go up and down completely randomly.

Pair Corralation between CITIC Telecom and GAMES OPERATORS

Assuming the 90 days horizon CITIC Telecom is expected to generate 2.41 times less return on investment than GAMES OPERATORS. In addition to that, CITIC Telecom is 1.59 times more volatile than GAMES OPERATORS SA. It trades about 0.04 of its total potential returns per unit of risk. GAMES OPERATORS SA is currently generating about 0.14 per unit of volatility. If you would invest  329.00  in GAMES OPERATORS SA on December 19, 2024 and sell it today you would earn a total of  76.00  from holding GAMES OPERATORS SA or generate 23.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

CITIC Telecom International  vs.  GAMES OPERATORS SA

CITIC Telecom Intern

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Telecom International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CITIC Telecom may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GAMES OPERATORS SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GAMES OPERATORS SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GAMES OPERATORS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC Telecom and GAMES OPERATORS

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

The idea behind CITIC Telecom International and GAMES OPERATORS SA 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 Stocks Directory module to find actively traded stocks across global markets.