Correlation Between Telecom Italia and Alien Metals
Can any of the company-specific risk be diversified away by investing in both Telecom Italia and Alien Metals 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 Alien Metals 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 Alien Metals, you can compare the effects of market volatilities on Telecom Italia and Alien Metals 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 Alien Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecom Italia and Alien Metals.
Diversification Opportunities for Telecom Italia and Alien Metals
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telecom and Alien is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Telecom Italia SpA and Alien Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alien Metals 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 Alien Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alien Metals has no effect on the direction of Telecom Italia i.e., Telecom Italia and Alien Metals go up and down completely randomly.
Pair Corralation between Telecom Italia and Alien Metals
Assuming the 90 days trading horizon Telecom Italia SpA is expected to generate 0.61 times more return on investment than Alien Metals. However, Telecom Italia SpA is 1.63 times less risky than Alien Metals. It trades about 0.14 of its potential returns per unit of risk. Alien Metals is currently generating about -0.12 per unit of risk. If you would invest 27.00 in Telecom Italia SpA on October 30, 2024 and sell it today you would earn a total of 3.00 from holding Telecom Italia SpA or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telecom Italia SpA vs. Alien Metals
Performance |
| Timeline |
| Telecom Italia SpA |
| Alien Metals |
Telecom Italia and Alien Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telecom Italia and Alien Metals
The main advantage of trading using opposite Telecom Italia and Alien Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telecom Italia position performs unexpectedly, Alien Metals 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 Alien Metals will offset losses from the drop in Alien Metals' long position.| Telecom Italia vs. Sydbank | Telecom Italia vs. Baker Steel Resources | Telecom Italia vs. Cembra Money Bank | Telecom Italia vs. United States Steel |
| Alien Metals vs. Ecclesiastical Insurance Office | Alien Metals vs. Charter Communications Cl | Alien Metals vs. Batm Advanced Communications | Alien Metals vs. Zegona Communications Plc |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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