Correlation Between Citic Telecom and Publity AG

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

Diversification Opportunities for Citic Telecom and Publity AG

-0.03

Correlation Coefficient

Citic Telecom  Publity AG

Good diversification

The 3 months correlation between Citic and Publity is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Publity AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Publity 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 Publity AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Publity AG has no effect on the direction of Citic Telecom i.e., Citic Telecom and Publity AG go up and down completely randomly.

Pair Corralation between Citic Telecom and Publity AG

Assuming the 90 days trading horizon Citic Telecom is expected to generate 248.94 times less return on investment than Publity AG. But when comparing it to its historical volatility, Citic Telecom International is 7.81 times less risky than Publity AG. It trades about 0.01 of its potential returns per unit of risk. Publity AG is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Publity AG on October 10, 2024 and sell it today you would earn a total of  10.00  from holding Publity AG or generate 28.57% return on investment over 90 days.

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

Citic Telecom International  vs.  Publity AG

Citic Telecom Intern

Risk-Adjusted Performance

0 of 100

Insignificant

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.

Publity AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Publity AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Publity AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citic Telecom and Publity AG

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

The idea behind Citic Telecom International and Publity 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.