Correlation Between Citic Telecom and INTERCONT HOTELS

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

Diversification Opportunities for Citic Telecom and INTERCONT HOTELS

0.62

Correlation Coefficient

Citic Telecom  INTERCONT HOTELS

Poor diversification

The 3 months correlation between Citic and INTERCONT is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and INTERCONT HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERCONT HOTELS 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 INTERCONT HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERCONT HOTELS has no effect on the direction of Citic Telecom i.e., Citic Telecom and INTERCONT HOTELS go up and down completely randomly.

Pair Corralation between Citic Telecom and INTERCONT HOTELS

Assuming the 90 days trading horizon Citic Telecom International is expected to generate 2.24 times more return on investment than INTERCONT HOTELS. However, Citic Telecom is 2.24 times more volatile than INTERCONT HOTELS. It trades about 0.14 of its potential returns per unit of risk. INTERCONT HOTELS is currently generating about 0.23 per unit of risk. If you would invest  19.00  in Citic Telecom International on September 5, 2024 and sell it today you would earn a total of  8.00  from holding Citic Telecom International or generate 42.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Citic Telecom International  vs.  INTERCONT HOTELS

Citic Telecom Intern

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Telecom International are ranked lower than 10 (%) 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.

INTERCONT HOTELS

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in INTERCONT HOTELS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, INTERCONT HOTELS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citic Telecom and INTERCONT HOTELS

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

The idea behind Citic Telecom International and INTERCONT HOTELS 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.