Correlation Between Citic Telecom and AdCapital

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

Diversification Opportunities for Citic Telecom and AdCapital

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Citic and AdCapital is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and AdCapital AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdCapital AG 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 AdCapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdCapital AG has no effect on the direction of Citic Telecom i.e., Citic Telecom and AdCapital go up and down completely randomly.

Pair Corralation between Citic Telecom and AdCapital

Assuming the 90 days trading horizon Citic Telecom International is expected to generate 0.58 times more return on investment than AdCapital. However, Citic Telecom International is 1.73 times less risky than AdCapital. It trades about 0.04 of its potential returns per unit of risk. AdCapital AG is currently generating about -0.19 per unit of risk. If you would invest  26.00  in Citic Telecom International on October 22, 2024 and sell it today you would earn a total of  1.00  from holding Citic Telecom International or generate 3.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Citic Telecom International  vs.  AdCapital AG

 Performance 
       Timeline  
Citic Telecom Intern 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Citic Telecom International are ranked lower than 3 (%) 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.
AdCapital AG 

Risk-Adjusted Performance

0 of 100

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

Citic Telecom and AdCapital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citic Telecom and AdCapital

The main advantage of trading using opposite Citic Telecom and AdCapital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, AdCapital 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 AdCapital will offset losses from the drop in AdCapital's long position.
The idea behind Citic Telecom International and AdCapital AG 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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