Correlation Between China Teletech and HG Holdings

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

By analyzing existing cross correlation between China Teletech Holding and HG Holdings, you can compare the effects of market volatilities on China Teletech and HG Holdings 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 Teletech with a short position of HG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Teletech and HG Holdings.

Diversification Opportunities for China Teletech and HG Holdings

0.0

Correlation Coefficient

China Teletech  HG Holdings

Pay attention - limited upside

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

Pair Corralation between China Teletech and HG Holdings

If you would invest  0.16  in China Teletech Holding on December 5, 2024 and sell it today you would earn a total of  20,000  from holding China Teletech Holding or generate 1.24999E7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

China Teletech Holding  vs.  HG Holdings

China Teletech Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Teletech Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, China Teletech unveiled solid returns over the last few months and may actually be approaching a breakup point.

HG Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days HG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, HG Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Teletech and HG Holdings

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

The idea behind China Teletech Holding and HG Holdings 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.