Correlation Between PARK24 SPONS and China Communications

Can any of the company-specific risk be diversified away by investing in both PARK24 SPONS and China Communications 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 PARK24 SPONS and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PARK24 SPONS ADR1 and China Communications Services, you can compare the effects of market volatilities on PARK24 SPONS and China Communications 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 PARK24 SPONS with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARK24 SPONS and China Communications.

Diversification Opportunities for PARK24 SPONS and China Communications

-0.53

Correlation Coefficient

PARK24 SPONS  China Communications

Excellent diversification

The 3 months correlation between PARK24 and China is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PARK24 SPONS ADR1 and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and PARK24 SPONS 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 PARK24 SPONS ADR1 are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of PARK24 SPONS i.e., PARK24 SPONS and China Communications go up and down completely randomly.

Pair Corralation between PARK24 SPONS and China Communications

Assuming the 90 days horizon PARK24 SPONS ADR1 is expected to under-perform the China Communications. But the stock apears to be less risky and, when comparing its historical volatility, PARK24 SPONS ADR1 is 1.27 times less risky than China Communications. The stock trades about -0.06 of its potential returns per unit of risk. The China Communications Services is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  42.00  in China Communications Services on April 22, 2025 and sell it today you would earn a total of  9.00  from holding China Communications Services or generate 21.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PARK24 SPONS ADR1  vs.  China Communications Services

PARK24 SPONS ADR1

Risk-Adjusted Performance

Very Weak

Over the last 90 days PARK24 SPONS ADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

China Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Communications Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, China Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PARK24 SPONS and China Communications

The main advantage of trading using opposite PARK24 SPONS and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARK24 SPONS position performs unexpectedly, China Communications 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 Communications will offset losses from the drop in China Communications' long position.

The idea behind PARK24 SPONS ADR1 and China Communications Services 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.