Correlation Between Walmart and Citic Telecom

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

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

Diversification Opportunities for Walmart and Citic Telecom

0.13

Correlation Coefficient

Walmart  Citic Telecom

Average diversification

The 3 months correlation between Walmart and Citic is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Walmart 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 Walmart 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 Walmart 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 Walmart i.e., Walmart and Citic Telecom go up and down completely randomly.

Pair Corralation between Walmart and Citic Telecom

Assuming the 90 days horizon Walmart is expected to under-perform the Citic Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 1.61 times less risky than Citic Telecom. The stock trades about -0.07 of its potential returns per unit of risk. The Citic Telecom International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Citic Telecom International on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Citic Telecom International or generate 0.0% return on investment over 90 days.

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

Walmart  vs.  Citic Telecom International

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Citic Telecom Intern

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Telecom International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Citic 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 Walmart and Citic Telecom

The main advantage of trading using opposite Walmart and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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 Walmart 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.