Correlation Between China Mobile and T Mobile

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

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

Diversification Opportunities for China Mobile and T Mobile

0.0

Correlation Coefficient

China Mobile  T Mobile

Pay attention - limited upside

The 3 months correlation between China and TM5 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Mobile Limited and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 Mobile Limited 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 China Mobile i.e., China Mobile and T Mobile go up and down completely randomly.

Pair Corralation between China Mobile and T Mobile

If you would invest  21,291  in T Mobile on December 27, 2024 and sell it today you would earn a total of  2,659  from holding T Mobile or generate 12.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

China Mobile Limited  vs.  T Mobile

China Mobile Limited

Risk-Adjusted Performance

Very Weak

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

T Mobile

Risk-Adjusted Performance

OK

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

Pair Trading with China Mobile and T Mobile

The main advantage of trading using opposite China Mobile and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mobile 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 China Mobile Limited 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.