Correlation Between Citic Telecom and Chiba Bank

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Citic Telecom and Chiba Bank 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 Citic Telecom and Chiba Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citic Telecom International and Chiba Bank, you can compare the effects of market volatilities on Citic Telecom and Chiba Bank 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 Citic Telecom with a short position of Chiba Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and Chiba Bank.

Diversification Opportunities for Citic Telecom and Chiba Bank

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Citic and Chiba is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Chiba Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiba Bank and Citic Telecom 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 Citic Telecom International are associated (or correlated) with Chiba Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiba Bank has no effect on the direction of Citic Telecom i.e., Citic Telecom and Chiba Bank go up and down completely randomly.

Pair Corralation between Citic Telecom and Chiba Bank

Assuming the 90 days trading horizon Citic Telecom International is expected to generate 0.61 times more return on investment than Chiba Bank. However, Citic Telecom International is 1.64 times less risky than Chiba Bank. It trades about 0.01 of its potential returns per unit of risk. Chiba Bank is currently generating about -0.07 per unit of risk. If you would invest  27.00  in Citic Telecom International on September 24, 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 Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Citic Telecom International  vs.  Chiba Bank

 Performance 
       Timeline  
Citic Telecom Intern 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Citic Telecom International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Citic Telecom may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Chiba Bank 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Chiba Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Chiba Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Citic Telecom and Chiba Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citic Telecom and Chiba Bank

The main advantage of trading using opposite Citic Telecom and Chiba Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom position performs unexpectedly, Chiba Bank 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 Chiba Bank will offset losses from the drop in Chiba Bank's long position.
The idea behind Citic Telecom International and Chiba Bank 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Global Correlations
Find global opportunities by holding instruments from different markets
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk