Correlation Between Citic Telecom and T-Mobile

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

Diversification Opportunities for Citic Telecom and T-Mobile

0.55

Correlation Coefficient

Citic Telecom  T-Mobile

Very weak diversification

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

Pair Corralation between Citic Telecom and T-Mobile

Assuming the 90 days trading horizon Citic Telecom is expected to generate 3.38 times less return on investment than T-Mobile. In addition to that, Citic Telecom is 1.64 times more volatile than T Mobile. It trades about 0.08 of its total potential returns per unit of risk. T Mobile is currently generating about 0.44 per unit of volatility. If you would invest  20,428  in T Mobile on September 5, 2024 and sell it today you would earn a total of  3,072  from holding T Mobile or generate 15.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Citic Telecom International  vs.  T Mobile

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.

T Mobile

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, T-Mobile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citic Telecom and T-Mobile

The main advantage of trading using opposite Citic Telecom and T-Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, T-Mobile 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 T-Mobile will offset losses from the drop in T-Mobile's long position.

The idea behind Citic Telecom International and T Mobile 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 CEOs Directory module to screen CEOs from public companies around the world.