Correlation Between Cellnex Telecom and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both Cellnex Telecom and Aeorema Communications 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 Cellnex Telecom and Aeorema Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cellnex Telecom SA and Aeorema Communications Plc, you can compare the effects of market volatilities on Cellnex Telecom and Aeorema Communications 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 Cellnex Telecom with a short position of Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cellnex Telecom and Aeorema Communications.
Diversification Opportunities for Cellnex Telecom and Aeorema Communications
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cellnex and Aeorema is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cellnex Telecom SA and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications and Cellnex 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 Cellnex Telecom SA are associated (or correlated) with Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of Cellnex Telecom i.e., Cellnex Telecom and Aeorema Communications go up and down completely randomly.
Pair Corralation between Cellnex Telecom and Aeorema Communications
Assuming the 90 days trading horizon Cellnex Telecom SA is expected to generate 0.7 times more return on investment than Aeorema Communications. However, Cellnex Telecom SA is 1.42 times less risky than Aeorema Communications. It trades about -0.01 of its potential returns per unit of risk. Aeorema Communications Plc is currently generating about -0.09 per unit of risk. If you would invest 3,543 in Cellnex Telecom SA on November 9, 2024 and sell it today you would lose (286.00) from holding Cellnex Telecom SA or give up 8.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cellnex Telecom SA vs. Aeorema Communications Plc
Performance |
| Timeline |
| Cellnex Telecom SA |
| Aeorema Communications |
Cellnex Telecom and Aeorema Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cellnex Telecom and Aeorema Communications
The main advantage of trading using opposite Cellnex Telecom and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cellnex Telecom position performs unexpectedly, Aeorema Communications 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 Aeorema Communications will offset losses from the drop in Aeorema Communications' long position.| Cellnex Telecom vs. G5 Entertainment AB | Cellnex Telecom vs. Raymond James Financial | Cellnex Telecom vs. Bankers Investment Trust | Cellnex Telecom vs. Creo Medical Group |
| Aeorema Communications vs. Hochschild Mining plc | Aeorema Communications vs. Take Two Interactive Software | Aeorema Communications vs. Atresmedia | Aeorema Communications vs. DXC Technology Co |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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