Correlation Between CITIC Telecom and GREEN BATTERY

Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and GREEN BATTERY 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 GREEN BATTERY 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 GREEN BATTERY MINERALS, you can compare the effects of market volatilities on CITIC Telecom and GREEN BATTERY 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 GREEN BATTERY. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and GREEN BATTERY.

Diversification Opportunities for CITIC Telecom and GREEN BATTERY

0.07

Correlation Coefficient

CITIC Telecom  GREEN BATTERY

Significant diversification

The 3 months correlation between CITIC and GREEN is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and GREEN BATTERY MINERALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREEN BATTERY MINERALS 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 GREEN BATTERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREEN BATTERY MINERALS has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and GREEN BATTERY go up and down completely randomly.

Pair Corralation between CITIC Telecom and GREEN BATTERY

Assuming the 90 days horizon CITIC Telecom is expected to generate 6.63 times less return on investment than GREEN BATTERY. But when comparing it to its historical volatility, CITIC Telecom International is 6.71 times less risky than GREEN BATTERY. It trades about 0.07 of its potential returns per unit of risk. GREEN BATTERY MINERALS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  43.00  in GREEN BATTERY MINERALS on October 3, 2024 and sell it today you would lose (38.45) from holding GREEN BATTERY MINERALS or give up 89.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.61%
Values	Daily Returns

CITIC Telecom International  vs.  GREEN BATTERY MINERALS

CITIC Telecom Intern

Risk-Adjusted Performance

2 of 100

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 fragile basic indicators, CITIC Telecom may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GREEN BATTERY MINERALS

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days GREEN BATTERY MINERALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, GREEN BATTERY reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC Telecom and GREEN BATTERY

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

The idea behind CITIC Telecom International and GREEN BATTERY MINERALS 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.