Correlation Between Citic Telecom and ADRIATIC METALS

Can any of the company-specific risk be diversified away by investing in both Citic Telecom and ADRIATIC METALS 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 ADRIATIC METALS 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 ADRIATIC METALS LS 013355, you can compare the effects of market volatilities on Citic Telecom and ADRIATIC METALS 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 ADRIATIC METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and ADRIATIC METALS.

Diversification Opportunities for Citic Telecom and ADRIATIC METALS

0.64

Correlation Coefficient

Citic Telecom  ADRIATIC METALS

Poor diversification

The 3 months correlation between Citic and ADRIATIC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and ADRIATIC METALS LS 013355 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADRIATIC METALS LS 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 ADRIATIC METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADRIATIC METALS LS has no effect on the direction of Citic Telecom i.e., Citic Telecom and ADRIATIC METALS go up and down completely randomly.

Pair Corralation between Citic Telecom and ADRIATIC METALS

Assuming the 90 days trading horizon Citic Telecom is expected to generate 3.43 times less return on investment than ADRIATIC METALS. But when comparing it to its historical volatility, Citic Telecom International is 1.77 times less risky than ADRIATIC METALS. It trades about 0.09 of its potential returns per unit of risk. ADRIATIC METALS LS 013355 is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  162.00  in ADRIATIC METALS LS 013355 on September 12, 2024 and sell it today you would earn a total of  82.00  from holding ADRIATIC METALS LS 013355 or generate 50.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citic Telecom International  vs.  ADRIATIC METALS LS 013355

Citic Telecom Intern

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Telecom International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Citic Telecom unveiled solid returns over the last few months and may actually be approaching a breakup point.

ADRIATIC METALS LS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ADRIATIC METALS LS 013355 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ADRIATIC METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citic Telecom and ADRIATIC METALS

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

The idea behind Citic Telecom International and ADRIATIC METALS LS 013355 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.