Correlation Between CITIC Telecom and UPDATE SOFTWARE

Can any of the company-specific risk be diversified away by investing in both CITIC Telecom and UPDATE SOFTWARE 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 UPDATE SOFTWARE 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 UPDATE SOFTWARE, you can compare the effects of market volatilities on CITIC Telecom and UPDATE SOFTWARE 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 UPDATE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and UPDATE SOFTWARE.

Diversification Opportunities for CITIC Telecom and UPDATE SOFTWARE

-0.1

Correlation Coefficient

CITIC Telecom  UPDATE SOFTWARE

Good diversification

The 3 months correlation between CITIC and UPDATE is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and UPDATE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPDATE SOFTWARE 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 UPDATE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPDATE SOFTWARE has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and UPDATE SOFTWARE go up and down completely randomly.

Pair Corralation between CITIC Telecom and UPDATE SOFTWARE

Assuming the 90 days horizon CITIC Telecom International is expected to generate 1.26 times more return on investment than UPDATE SOFTWARE. However, CITIC Telecom is 1.26 times more volatile than UPDATE SOFTWARE. It trades about 0.09 of its potential returns per unit of risk. UPDATE SOFTWARE is currently generating about 0.02 per unit of risk. If you would invest  23.00  in CITIC Telecom International on April 21, 2025 and sell it today you would earn a total of  4.00  from holding CITIC Telecom International or generate 17.39% return on investment over 90 days.

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

CITIC Telecom International  vs.  UPDATE SOFTWARE

CITIC Telecom Intern

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Telecom International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, CITIC Telecom reported solid returns over the last few months and may actually be approaching a breakup point.

UPDATE SOFTWARE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UPDATE SOFTWARE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, UPDATE SOFTWARE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CITIC Telecom and UPDATE SOFTWARE

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

The idea behind CITIC Telecom International and UPDATE SOFTWARE 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.