Correlation Between Citic Telecom and INTUITIVE SURGICAL

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

Diversification Opportunities for Citic Telecom and INTUITIVE SURGICAL

0.46

Correlation Coefficient

Citic Telecom  INTUITIVE SURGICAL

Very weak diversification

The 3 months correlation between Citic and INTUITIVE is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL 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 INTUITIVE SURGICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTUITIVE SURGICAL has no effect on the direction of Citic Telecom i.e., Citic Telecom and INTUITIVE SURGICAL go up and down completely randomly.

Pair Corralation between Citic Telecom and INTUITIVE SURGICAL

Assuming the 90 days trading horizon Citic Telecom International is expected to generate 4.12 times more return on investment than INTUITIVE SURGICAL. However, Citic Telecom is 4.12 times more volatile than INTUITIVE SURGICAL. It trades about 0.07 of its potential returns per unit of risk. INTUITIVE SURGICAL is currently generating about 0.09 per unit of risk. If you would invest  4.04  in Citic Telecom International on October 4, 2024 and sell it today you would earn a total of  22.96  from holding Citic Telecom International or generate 568.32% return on investment over 90 days.

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

Citic Telecom International  vs.  INTUITIVE SURGICAL

Citic Telecom Intern

Risk-Adjusted Performance

3 of 100

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.

INTUITIVE SURGICAL

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, INTUITIVE SURGICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citic Telecom and INTUITIVE SURGICAL

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

The idea behind Citic Telecom International and INTUITIVE SURGICAL 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.