Correlation Between China Mobile and AMP

Can any of the company-specific risk be diversified away by investing in both China Mobile and AMP 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 China Mobile and AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Life Insurance and AMP Limited, you can compare the effects of market volatilities on China Mobile and AMP 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 China Mobile with a short position of AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and AMP.

Diversification Opportunities for China Mobile and AMP

0.0

Correlation Coefficient

China Mobile  AMP

Pay attention - limited upside

The 3 months correlation between China and AMP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and AMP Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP Limited and China Mobile 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 China Life Insurance are associated (or correlated) with AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP Limited has no effect on the direction of China Mobile i.e., China Mobile and AMP go up and down completely randomly.

Pair Corralation between China Mobile and AMP

If you would invest  113.00  in China Life Insurance on September 11, 2024 and sell it today you would earn a total of  81.00  from holding China Life Insurance or generate 71.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

China Life Insurance  vs.  AMP Limited

China Life Insurance

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Life Insurance are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Mobile reported solid returns over the last few months and may actually be approaching a breakup point.

AMP Limited

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days AMP Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AMP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with China Mobile and AMP

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

The idea behind China Life Insurance and AMP Limited 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.