Correlation Between TuanChe ADR and Telus Corp

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

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

Diversification Opportunities for TuanChe ADR and Telus Corp

-0.49

Correlation Coefficient

TuanChe ADR  Telus Corp

Very good diversification

The 3 months correlation between TuanChe and Telus is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding TuanChe ADR and Telus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telus Corp and TuanChe ADR 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 TuanChe ADR are associated (or correlated) with Telus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telus Corp has no effect on the direction of TuanChe ADR i.e., TuanChe ADR and Telus Corp go up and down completely randomly.

Pair Corralation between TuanChe ADR and Telus Corp

Allowing for the 90-day total investment horizon TuanChe ADR is expected to under-perform the Telus Corp. In addition to that, TuanChe ADR is 5.09 times more volatile than Telus Corp. It trades about -0.01 of its total potential returns per unit of risk. Telus Corp is currently generating about 0.05 per unit of volatility. If you would invest  1,526  in Telus Corp on November 28, 2024 and sell it today you would earn a total of  46.00  from holding Telus Corp or generate 3.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

TuanChe ADR  vs.  Telus Corp

TuanChe ADR

Risk-Adjusted Performance

Weak

Over the last 90 days TuanChe ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, TuanChe ADR is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Telus Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telus Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Telus Corp is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TuanChe ADR and Telus Corp

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

The idea behind TuanChe ADR and Telus Corp 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.