Correlation Between Telecom Italia and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on Telecom Italia and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and Caledonia Mining.
Diversification Opportunities for Telecom Italia and Caledonia Mining
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Telecom and Caledonia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Telecom Italia i.e., Telecom Italia and Caledonia Mining go up and down completely randomly.
Pair Corralation between Telecom Italia and Caledonia Mining
Assuming the 90 days trading horizon Telecom Italia SpA is expected to generate 1.32 times more return on investment than Caledonia Mining. However, Telecom Italia is 1.32 times more volatile than Caledonia Mining. It trades about 0.03 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.01 per unit of risk. If you would invest 24.00 in Telecom Italia SpA on September 28, 2024 and sell it today you would earn a total of 4.00 from holding Telecom Italia SpA or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Italia SpA vs. Caledonia Mining
Performance |
| Timeline |
| Telecom Italia SpA |
| Caledonia Mining |
Telecom Italia and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and Caledonia Mining
The main advantage of trading using opposite Telecom Italia and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Telecom Italia vs. Uniper SE | Telecom Italia vs. Mulberry Group PLC | Telecom Italia vs. London Security Plc | Telecom Italia vs. Triad Group PLC |
| Caledonia Mining vs. Givaudan SA | Caledonia Mining vs. Antofagasta PLC | Caledonia Mining vs. Ferrexpo PLC | Caledonia Mining vs. Atalaya Mining |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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