Correlation Between Telecom Italia and G5 Entertainment
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and G5 Entertainment 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 Telecom Italia and G5 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telecom Italia SpA and G5 Entertainment AB, you can compare the effects of market volatilities on Telecom Italia and G5 Entertainment 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 Telecom Italia with a short position of G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and G5 Entertainment.
Diversification Opportunities for Telecom Italia and G5 Entertainment
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Telecom and 0QUS is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and G5 Entertainment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment and Telecom Italia 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 Telecom Italia SpA are associated (or correlated) with G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment has no effect on the direction of Telecom Italia i.e., Telecom Italia and G5 Entertainment go up and down completely randomly.
Pair Corralation between Telecom Italia and G5 Entertainment
Assuming the 90 days trading horizon Telecom Italia is expected to generate 2.45 times less return on investment than G5 Entertainment. But when comparing it to its historical volatility, Telecom Italia SpA is 1.48 times less risky than G5 Entertainment. It trades about 0.23 of its potential returns per unit of risk. G5 Entertainment AB is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 10,940 in G5 Entertainment AB on November 1, 2024 and sell it today you would earn a total of 1,940 from holding G5 Entertainment AB or generate 17.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Italia SpA vs. G5 Entertainment AB
Performance |
| Timeline |
| Telecom Italia SpA |
| G5 Entertainment |
Telecom Italia and G5 Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and G5 Entertainment
The main advantage of trading using opposite Telecom Italia and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.| Telecom Italia vs. Anglo Asian Mining | Telecom Italia vs. Silver Bullet Data | Telecom Italia vs. Blackrock World Mining | Telecom Italia vs. Gruppo MutuiOnline SpA |
| G5 Entertainment vs. Automatic Data Processing | G5 Entertainment vs. GlobalData PLC | G5 Entertainment vs. Telecom Italia SpA | G5 Entertainment vs. Charter Communications Cl |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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