Correlation Between Citic Telecom and DOCDATA

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

Diversification Opportunities for Citic Telecom and DOCDATA

-0.52

Correlation Coefficient

Citic Telecom  DOCDATA

Excellent diversification

The 3 months correlation between Citic and DOCDATA is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and DOCDATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOCDATA 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 DOCDATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOCDATA has no effect on the direction of Citic Telecom i.e., Citic Telecom and DOCDATA go up and down completely randomly.

Pair Corralation between Citic Telecom and DOCDATA

Assuming the 90 days trading horizon Citic Telecom International is expected to generate 1.26 times more return on investment than DOCDATA. However, Citic Telecom is 1.26 times more volatile than DOCDATA. It trades about 0.05 of its potential returns per unit of risk. DOCDATA is currently generating about -0.08 per unit of risk. If you would invest  25.00  in Citic Telecom International on May 12, 2025 and sell it today you would earn a total of  2.00  from holding Citic Telecom International or generate 8.0% return on investment over 90 days.

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

Citic Telecom International  vs.  DOCDATA

Citic Telecom Intern

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Telecom International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Citic Telecom may actually be approaching a critical reversion point that can send shares even higher in September 2025.

DOCDATA

Risk-Adjusted Performance

Weakest

Over the last 90 days DOCDATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Citic Telecom and DOCDATA

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

The idea behind Citic Telecom International and DOCDATA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.