Correlation Between Microsoft and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Citic Telecom International, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Citic Telecom.
Diversification Opportunities for Microsoft and Citic Telecom
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microsoft and Citic is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Citic Telecom go up and down completely randomly.
Pair Corralation between Microsoft and Citic Telecom
Given the investment horizon of 90 days Microsoft is expected to under-perform the Citic Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.85 times less risky than Citic Telecom. The stock trades about -0.05 of its potential returns per unit of risk. The Citic Telecom International is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Citic Telecom International on September 25, 2025 and sell it today you would lose (1.00) from holding Citic Telecom International or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Microsoft vs. Citic Telecom International
Performance |
| Timeline |
| Microsoft |
| Citic Telecom Intern |
Microsoft and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Citic Telecom
The main advantage of trading using opposite Microsoft and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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 Microsoft 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.| Citic Telecom vs. ZEDER INVESTMENTS | Citic Telecom vs. EAT WELL INVESTMENT | Citic Telecom vs. New Residential Investment | Citic Telecom vs. PennyMac Mortgage 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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