Correlation Between ADHI KARYA and CITIC Telecom
Can any of the company-specific risk be diversified away by investing in both ADHI KARYA and CITIC Telecom 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 ADHI KARYA and CITIC Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADHI KARYA and CITIC Telecom International, you can compare the effects of market volatilities on ADHI KARYA and CITIC Telecom 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 ADHI KARYA with a short position of CITIC Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADHI KARYA and CITIC Telecom.
Diversification Opportunities for ADHI KARYA and CITIC Telecom
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between ADHI and CITIC is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ADHI KARYA and CITIC Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Telecom Intern and ADHI KARYA 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 ADHI KARYA are associated (or correlated) with CITIC Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Telecom Intern has no effect on the direction of ADHI KARYA i.e., ADHI KARYA and CITIC Telecom go up and down completely randomly.
Pair Corralation between ADHI KARYA and CITIC Telecom
Assuming the 90 days trading horizon ADHI KARYA is expected to generate 9.21 times more return on investment than CITIC Telecom. However, ADHI KARYA is 9.21 times more volatile than CITIC Telecom International. It trades about 0.07 of its potential returns per unit of risk. CITIC Telecom International is currently generating about 0.07 per unit of risk. If you would invest 2.20 in ADHI KARYA on October 9, 2024 and sell it today you would lose (1.20) from holding ADHI KARYA or give up 54.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ADHI KARYA vs. CITIC Telecom International
Performance |
Timeline |
ADHI KARYA |
CITIC Telecom Intern |
ADHI KARYA and CITIC Telecom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ADHI KARYA and CITIC Telecom
The main advantage of trading using opposite ADHI KARYA and CITIC Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADHI KARYA position performs unexpectedly, CITIC Telecom 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 CITIC Telecom will offset losses from the drop in CITIC Telecom's long position.The idea behind ADHI KARYA and CITIC Telecom International 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.CITIC Telecom vs. Nippon Telegraph and | CITIC Telecom vs. Superior Plus Corp | CITIC Telecom vs. NMI Holdings | CITIC Telecom vs. SIVERS SEMICONDUCTORS AB |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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