Correlation Between TRAVEL + and CHINA TELECOM

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

By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and CHINA TELECOM H , you can compare the effects of market volatilities on TRAVEL + and CHINA 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 TRAVEL + with a short position of CHINA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and CHINA TELECOM.

Diversification Opportunities for TRAVEL + and CHINA TELECOM

-0.78

Correlation Coefficient

TRAVEL +  CHINA TELECOM

Pay attention - limited upside

The 3 months correlation between TRAVEL and CHINA is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and CHINA TELECOM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA TELECOM H and TRAVEL + 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 TRAVEL LEISURE DL 01 are associated (or correlated) with CHINA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA TELECOM H has no effect on the direction of TRAVEL + i.e., TRAVEL + and CHINA TELECOM go up and down completely randomly.

Pair Corralation between TRAVEL + and CHINA TELECOM

If you would invest  52.00  in CHINA TELECOM H on October 15, 2024 and sell it today you would earn a total of  0.00  from holding CHINA TELECOM H or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

TRAVEL LEISURE DL 01  vs.  CHINA TELECOM H

TRAVEL LEISURE DL

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

CHINA TELECOM H

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHINA TELECOM H has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, CHINA TELECOM is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TRAVEL + and CHINA TELECOM

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

The idea behind TRAVEL LEISURE DL 01 and CHINA TELECOM H 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.