Correlation Between Citic Telecom and Corteva
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and Corteva 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 Corteva 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 Corteva, you can compare the effects of market volatilities on Citic Telecom and Corteva 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 Corteva. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and Corteva.
Diversification Opportunities for Citic Telecom and Corteva
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citic and Corteva is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Corteva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corteva 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 Corteva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corteva has no effect on the direction of Citic Telecom i.e., Citic Telecom and Corteva go up and down completely randomly.
Pair Corralation between Citic Telecom and Corteva
Assuming the 90 days trading horizon Citic Telecom is expected to generate 2.14 times less return on investment than Corteva. But when comparing it to its historical volatility, Citic Telecom International is 1.08 times less risky than Corteva. It trades about 0.04 of its potential returns per unit of risk. Corteva is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,421 in Corteva on October 21, 2024 and sell it today you would earn a total of 510.00 from holding Corteva or generate 9.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Citic Telecom International vs. Corteva
Performance |
Timeline |
Citic Telecom Intern |
Corteva |
Citic Telecom and Corteva Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citic Telecom and Corteva
The main advantage of trading using opposite Citic Telecom and Corteva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, Corteva 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 Corteva will offset losses from the drop in Corteva's long position.Citic Telecom vs. HK Electric Investments | Citic Telecom vs. CHRYSALIS INVESTMENTS LTD | Citic Telecom vs. CALTAGIRONE EDITORE | Citic Telecom vs. Khiron Life Sciences |
Corteva vs. Corteva | Corteva vs. The Mosaic | Corteva vs. CF Industries Holdings | Corteva vs. Yara International ASA |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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