Correlation Between Citic Telecom and WW Grainger

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

Diversification Opportunities for Citic Telecom and WW Grainger

-0.16

Correlation Coefficient

Citic Telecom  WW Grainger

Good diversification

The 3 months correlation between Citic and GWW is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of Citic Telecom i.e., Citic Telecom and WW Grainger go up and down completely randomly.

Pair Corralation between Citic Telecom and WW Grainger

Assuming the 90 days trading horizon Citic Telecom International is expected to generate 1.82 times more return on investment than WW Grainger. However, Citic Telecom is 1.82 times more volatile than WW Grainger. It trades about 0.09 of its potential returns per unit of risk. WW Grainger is currently generating about 0.02 per unit of risk. If you would invest  24.00  in Citic Telecom International on April 24, 2025 and sell it today you would earn a total of  3.00  from holding Citic Telecom International or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Citic Telecom International  vs.  WW Grainger

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. In spite of comparatively fragile basic indicators, Citic Telecom unveiled solid returns over the last few months and may actually be approaching a breakup point.

WW Grainger

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WW Grainger are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, WW Grainger is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citic Telecom and WW Grainger

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

The idea behind Citic Telecom International and WW Grainger 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 CEOs Directory module to screen CEOs from public companies around the world.