Correlation Between CITIC Telecom and Comba Telecom

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

Diversification Opportunities for CITIC Telecom and Comba Telecom

-0.31

Correlation Coefficient

CITIC Telecom  Comba Telecom

Very good diversification

The 3 months correlation between CITIC and Comba is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and Comba Telecom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comba Telecom Systems 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 Comba Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comba Telecom Systems has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and Comba Telecom go up and down completely randomly.

Pair Corralation between CITIC Telecom and Comba Telecom

Assuming the 90 days horizon CITIC Telecom International is expected to generate 1.54 times more return on investment than Comba Telecom. However, CITIC Telecom is 1.54 times more volatile than Comba Telecom Systems. It trades about 0.07 of its potential returns per unit of risk. Comba Telecom Systems is currently generating about 0.06 per unit of risk. If you would invest  11.00  in CITIC Telecom International on September 17, 2024 and sell it today you would earn a total of  16.00  from holding CITIC Telecom International or generate 145.45% return on investment over 90 days.

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

CITIC Telecom International  vs.  Comba Telecom Systems

CITIC Telecom Intern

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Telecom International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITIC Telecom reported solid returns over the last few months and may actually be approaching a breakup point.

Comba Telecom Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comba Telecom Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Comba Telecom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITIC Telecom and Comba Telecom

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

The idea behind CITIC Telecom International and Comba Telecom Systems 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.