Correlation Between Citic Telecom and AOYAMA TRADING

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

Diversification Opportunities for Citic Telecom and AOYAMA TRADING

0.68

Correlation Coefficient

Citic Telecom  AOYAMA TRADING

Poor diversification

The 3 months correlation between Citic and AOYAMA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING 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 AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of Citic Telecom i.e., Citic Telecom and AOYAMA TRADING go up and down completely randomly.

Pair Corralation between Citic Telecom and AOYAMA TRADING

Assuming the 90 days trading horizon Citic Telecom is expected to generate 38.74 times less return on investment than AOYAMA TRADING. But when comparing it to its historical volatility, Citic Telecom International is 2.12 times less risky than AOYAMA TRADING. It trades about 0.01 of its potential returns per unit of risk. AOYAMA TRADING is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  780.00  in AOYAMA TRADING on October 26, 2024 and sell it today you would earn a total of  550.00  from holding AOYAMA TRADING or generate 70.51% 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.  AOYAMA TRADING

Citic Telecom Intern

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Citic Telecom International has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

AOYAMA TRADING

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AOYAMA TRADING are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, AOYAMA TRADING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citic Telecom and AOYAMA TRADING

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

The idea behind Citic Telecom International and AOYAMA TRADING 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.