Correlation Between China Communications and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both China Communications 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 China Communications and Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and Citic Telecom International, you can compare the effects of market volatilities on China Communications 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 China Communications with a short position of Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Citic Telecom.
Diversification Opportunities for China Communications and Citic Telecom
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Citic is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services 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 China Communications 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 China Communications Services 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 China Communications i.e., China Communications and Citic Telecom go up and down completely randomly.
Pair Corralation between China Communications and Citic Telecom
Assuming the 90 days horizon China Communications Services is expected to generate 1.15 times more return on investment than Citic Telecom. However, China Communications is 1.15 times more volatile than Citic Telecom International. It trades about 0.06 of its potential returns per unit of risk. Citic Telecom International is currently generating about 0.04 per unit of risk. If you would invest 49.00 in China Communications Services on September 2, 2025 and sell it today you would earn a total of 4.00 from holding China Communications Services or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. Citic Telecom International
Performance |
| Timeline |
| China Communications |
| Citic Telecom Intern |
China Communications and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Citic Telecom
The main advantage of trading using opposite China Communications and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications 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.| China Communications vs. Geely Automobile Holdings | China Communications vs. MINCO SILVER | China Communications vs. Eurasia Mining Plc | China Communications vs. Yanzhou Coal Mining |
| Citic Telecom vs. SENECA FOODS A | Citic Telecom vs. JAPAN AIRLINES | Citic Telecom vs. SOUTHWEST AIRLINES | Citic Telecom vs. Tyson Foods |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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