Correlation Between CITIC Telecom and INTERNET INJPADR

Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and INTERNET INJPADR 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 INTERNET INJPADR 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 INTERNET INJPADR 1, you can compare the effects of market volatilities on CITIC Telecom and INTERNET INJPADR 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 INTERNET INJPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and INTERNET INJPADR.

Diversification Opportunities for CITIC Telecom and INTERNET INJPADR

-0.46

Correlation Coefficient

CITIC Telecom  INTERNET INJPADR

Very good diversification

The 3 months correlation between CITIC and INTERNET is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and INTERNET INJPADR 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNET INJPADR 1 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 INTERNET INJPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNET INJPADR 1 has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and INTERNET INJPADR go up and down completely randomly.

Pair Corralation between CITIC Telecom and INTERNET INJPADR

Assuming the 90 days horizon CITIC Telecom International is expected to generate 1.96 times more return on investment than INTERNET INJPADR. However, CITIC Telecom is 1.96 times more volatile than INTERNET INJPADR 1. It trades about -0.02 of its potential returns per unit of risk. INTERNET INJPADR 1 is currently generating about -0.1 per unit of risk. If you would invest  29.00  in CITIC Telecom International on December 20, 2024 and sell it today you would lose (3.00) from holding CITIC Telecom International or give up 10.34% of portfolio value over 90 days.

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

CITIC Telecom International  vs.  INTERNET INJPADR 1

CITIC Telecom Intern

Risk-Adjusted Performance

Very Weak

Over the last 90 days CITIC Telecom International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CITIC Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

INTERNET INJPADR 1

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERNET INJPADR 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CITIC Telecom and INTERNET INJPADR

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

The idea behind CITIC Telecom International and INTERNET INJPADR 1 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.