Correlation Between Citic Telecom and Gaming

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

Diversification Opportunities for Citic Telecom and Gaming

0.4

Correlation Coefficient

Citic Telecom  Gaming

Very weak diversification

The 3 months correlation between Citic and Gaming is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure 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 Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of Citic Telecom i.e., Citic Telecom and Gaming go up and down completely randomly.

Pair Corralation between Citic Telecom and Gaming

Assuming the 90 days trading horizon Citic Telecom is expected to generate 2.23 times less return on investment than Gaming. In addition to that, Citic Telecom is 2.05 times more volatile than Gaming and Leisure. It trades about 0.01 of its total potential returns per unit of risk. Gaming and Leisure is currently generating about 0.06 per unit of volatility. If you would invest  4,383  in Gaming and Leisure on December 20, 2024 and sell it today you would earn a total of  215.00  from holding Gaming and Leisure or generate 4.91% 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.  Gaming and Leisure

Citic Telecom Intern

Risk-Adjusted Performance

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. In spite of comparatively stable basic indicators, Citic Telecom is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Gaming and Leisure

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming and Leisure are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gaming is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citic Telecom and Gaming

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

The idea behind Citic Telecom International and Gaming and Leisure 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.