Correlation Between COMSovereign Holding and China Tower

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

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

Diversification Opportunities for COMSovereign Holding and China Tower

-0.37

Correlation Coefficient

COMSovereign Holding  China Tower

Very good diversification

The 3 months correlation between COMSovereign and China is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding COMSovereign Holding Corp and China Tower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Tower and COMSovereign Holding 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 COMSovereign Holding Corp are associated (or correlated) with China Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Tower has no effect on the direction of COMSovereign Holding i.e., COMSovereign Holding and China Tower go up and down completely randomly.

Pair Corralation between COMSovereign Holding and China Tower

Given the investment horizon of 90 days COMSovereign Holding Corp is expected to under-perform the China Tower. But the pink sheet apears to be less risky and, when comparing its historical volatility, COMSovereign Holding Corp is 6.77 times less risky than China Tower. The pink sheet trades about -0.01 of its potential returns per unit of risk. The China Tower is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12.00  in China Tower on October 5, 2024 and sell it today you would earn a total of  2.00  from holding China Tower or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.15%
Values	Daily Returns

COMSovereign Holding Corp  vs.  China Tower

COMSovereign Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMSovereign Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, COMSovereign Holding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

China Tower

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Tower are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, China Tower is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with COMSovereign Holding and China Tower

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

The idea behind COMSovereign Holding Corp and China Tower 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.