Correlation Between CITIC Telecom and Ipsen SA

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

Diversification Opportunities for CITIC Telecom and Ipsen SA

-0.15

Correlation Coefficient

CITIC Telecom  Ipsen SA

Good diversification

The 3 months correlation between CITIC and Ipsen is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and Ipsen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsen 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 Ipsen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsen SA has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and Ipsen SA go up and down completely randomly.

Pair Corralation between CITIC Telecom and Ipsen SA

Assuming the 90 days horizon CITIC Telecom is expected to generate 1.41 times less return on investment than Ipsen SA. In addition to that, CITIC Telecom is 1.99 times more volatile than Ipsen SA. It trades about 0.01 of its total potential returns per unit of risk. Ipsen SA is currently generating about 0.04 per unit of volatility. If you would invest  11,460  in Ipsen SA on October 25, 2024 and sell it today you would earn a total of  300.00  from holding Ipsen SA or generate 2.62% 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.  Ipsen SA

CITIC Telecom Intern

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Telecom International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CITIC Telecom is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Ipsen SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ipsen SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Ipsen SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CITIC Telecom and Ipsen SA

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

The idea behind CITIC Telecom International and Ipsen 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.