Correlation Between National Retail and CHINA TELECOM

Can any of the company-specific risk be diversified away by investing in both National Retail and CHINA 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 National Retail and CHINA TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Retail Properties and CHINA TELECOM H , you can compare the effects of market volatilities on National Retail and CHINA 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 National Retail with a short position of CHINA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and CHINA TELECOM.

Diversification Opportunities for National Retail and CHINA TELECOM

0.06

Correlation Coefficient

National Retail  CHINA TELECOM

Significant diversification

The 3 months correlation between National and CHINA is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and CHINA TELECOM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA TELECOM H and National Retail 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 National Retail Properties are associated (or correlated) with CHINA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA TELECOM H has no effect on the direction of National Retail i.e., National Retail and CHINA TELECOM go up and down completely randomly.

Pair Corralation between National Retail and CHINA TELECOM

Assuming the 90 days trading horizon National Retail Properties is expected to under-perform the CHINA TELECOM. But the stock apears to be less risky and, when comparing its historical volatility, National Retail Properties is 2.72 times less risky than CHINA TELECOM. The stock trades about -0.06 of its potential returns per unit of risk. The CHINA TELECOM H is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  50.00  in CHINA TELECOM H on March 30, 2025 and sell it today you would earn a total of  2.00  from holding CHINA TELECOM H or generate 4.0% return on investment over 90 days.

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

National Retail Properties  vs.  CHINA TELECOM H

National Retail Prop

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Retail is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CHINA TELECOM H

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA TELECOM H are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, CHINA TELECOM may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with National Retail and CHINA TELECOM

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

The idea behind National Retail Properties and CHINA TELECOM H 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.