Correlation Between T MOBILE and China Energy

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

By analyzing existing cross correlation between T MOBILE INCDL 00001 and China Energy Engineering, you can compare the effects of market volatilities on T MOBILE and China Energy 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 China Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of T MOBILE and China Energy.

Diversification Opportunities for T MOBILE and China Energy

-0.05

Correlation Coefficient

T MOBILE  China Energy

Good diversification

The 3 months correlation between TM5 and China is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding T MOBILE INCDL 00001 and China Energy Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Energy Engineering 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 INCDL 00001 are associated (or correlated) with China Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Energy Engineering has no effect on the direction of T MOBILE i.e., T MOBILE and China Energy go up and down completely randomly.

Pair Corralation between T MOBILE and China Energy

Assuming the 90 days trading horizon T MOBILE is expected to generate 2.17 times less return on investment than China Energy. But when comparing it to its historical volatility, T MOBILE INCDL 00001 is 3.15 times less risky than China Energy. It trades about 0.08 of its potential returns per unit of risk. China Energy Engineering is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5.28  in China Energy Engineering on October 11, 2024 and sell it today you would earn a total of  5.72  from holding China Energy Engineering or generate 108.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.4%
Values	Daily Returns

T MOBILE INCDL 00001  vs.  China Energy Engineering

T MOBILE INCDL

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T MOBILE INCDL 00001 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, T MOBILE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

China Energy Engineering

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Energy Engineering are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, China Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with T MOBILE and China Energy

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

The idea behind T MOBILE INCDL 00001 and China Energy Engineering 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.