Correlation Between T Mobile and Sinopec Oilfield

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

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

Diversification Opportunities for T Mobile and Sinopec Oilfield

-0.33

Correlation Coefficient

T Mobile  Sinopec Oilfield

Very good diversification

The 3 months correlation between TM5 and Sinopec is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Sinopec Oilfield Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Oilfield Service and T 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 T Mobile are associated (or correlated) with Sinopec Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Oilfield Service has no effect on the direction of T Mobile i.e., T Mobile and Sinopec Oilfield go up and down completely randomly.

Pair Corralation between T Mobile and Sinopec Oilfield

Assuming the 90 days horizon T Mobile is expected to generate 0.75 times more return on investment than Sinopec Oilfield. However, T Mobile is 1.34 times less risky than Sinopec Oilfield. It trades about 0.11 of its potential returns per unit of risk. Sinopec Oilfield Service is currently generating about 0.01 per unit of risk. If you would invest  21,416  in T Mobile on December 30, 2024 and sell it today you would earn a total of  3,039  from holding T Mobile or generate 14.19% return on investment over 90 days.

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

T Mobile  vs.  Sinopec Oilfield Service

T Mobile

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 8 (%) 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.

Sinopec Oilfield Service

Risk-Adjusted Performance

Weak

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

Pair Trading with T Mobile and Sinopec Oilfield

The main advantage of trading using opposite T Mobile and Sinopec Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Mobile position performs unexpectedly, Sinopec Oilfield 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 Sinopec Oilfield will offset losses from the drop in Sinopec Oilfield's long position.

The idea behind T Mobile and Sinopec Oilfield Service 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.