Correlation Between China Mobile and Telefonica Brasil

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

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

Diversification Opportunities for China Mobile and Telefonica Brasil

0.0

Correlation Coefficient

China Mobile  Telefonica Brasil

Pay attention - limited upside

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

Pair Corralation between China Mobile and Telefonica Brasil

If you would invest (100.00) in China Mobile Limited on February 2, 2024 and sell it today you would earn a total of  100.00  from holding China Mobile 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 Mobile Limited  vs.  Telefonica Brasil SA

China Mobile Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Mobile Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, China Mobile is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Telefonica Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefonica Brasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with China Mobile and Telefonica Brasil

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

The idea behind China Mobile Limited and Telefonica Brasil SA 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.