Correlation Between CITIC Telecom and Hitachi
Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and Hitachi 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 Hitachi 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 Hitachi, you can compare the effects of market volatilities on CITIC Telecom and Hitachi 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 Hitachi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and Hitachi.
Diversification Opportunities for CITIC Telecom and Hitachi
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CITIC and Hitachi is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and Hitachi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi 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 Hitachi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and Hitachi go up and down completely randomly.
Pair Corralation between CITIC Telecom and Hitachi
Assuming the 90 days horizon CITIC Telecom International is expected to generate 1.44 times more return on investment than Hitachi. However, CITIC Telecom is 1.44 times more volatile than Hitachi. It trades about 0.07 of its potential returns per unit of risk. Hitachi is currently generating about 0.04 per unit of risk. If you would invest 26.00 in CITIC Telecom International on September 15, 2024 and sell it today you would earn a total of 1.00 from holding CITIC Telecom International or generate 3.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CITIC Telecom International vs. Hitachi
Performance |
Timeline |
CITIC Telecom Intern |
Hitachi |
CITIC Telecom and Hitachi Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CITIC Telecom and Hitachi
The main advantage of trading using opposite CITIC Telecom and Hitachi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom position performs unexpectedly, Hitachi 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 Hitachi will offset losses from the drop in Hitachi's long position.CITIC Telecom vs. Alfa Financial Software | CITIC Telecom vs. UPDATE SOFTWARE | CITIC Telecom vs. Guidewire Software | CITIC Telecom vs. Playtech plc |
Hitachi vs. Citic Telecom International | Hitachi vs. Dairy Farm International | Hitachi vs. Charter Communications | Hitachi vs. CITIC Telecom International |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume |