Correlation Between China Unicom and Telus Corp

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

By analyzing existing cross correlation between China Unicom Limited and Telus Corp, you can compare the effects of market volatilities on China Unicom and Telus Corp 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 China Unicom with a short position of Telus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Unicom and Telus Corp.

Diversification Opportunities for China Unicom and Telus Corp

0.0

Correlation Coefficient

China Unicom  Telus Corp

Pay attention - limited upside

The 3 months correlation between China and Telus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Unicom Limited and Telus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telus Corp and China Unicom 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 China Unicom Limited are associated (or correlated) with Telus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telus Corp has no effect on the direction of China Unicom i.e., China Unicom and Telus Corp go up and down completely randomly.

Pair Corralation between China Unicom and Telus Corp

If you would invest (100.00) in China Unicom Limited on February 3, 2024 and sell it today you would earn a total of  100.00  from holding China Unicom Limited or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

China Unicom Limited  vs.  Telus Corp

China Unicom Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Telus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with China Unicom and Telus Corp

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

The idea behind China Unicom Limited and Telus Corp 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.