Correlation Between Airtel Africa and America Movil
Can any of the company-specific risk be diversified away by investing in both Airtel Africa and America Movil 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 Airtel Africa and America Movil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airtel Africa Plc and America Movil SAB, you can compare the effects of market volatilities on Airtel Africa and America Movil 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 Airtel Africa with a short position of America Movil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airtel Africa and America Movil.
Diversification Opportunities for Airtel Africa and America Movil
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Airtel and America is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Airtel Africa Plc and America Movil SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America Movil SAB and Airtel Africa 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 Airtel Africa Plc are associated (or correlated) with America Movil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America Movil SAB has no effect on the direction of Airtel Africa i.e., Airtel Africa and America Movil go up and down completely randomly.
Pair Corralation between Airtel Africa and America Movil
Assuming the 90 days horizon Airtel Africa Plc is expected to generate 2.7 times more return on investment than America Movil. However, Airtel Africa is 2.7 times more volatile than America Movil SAB. It trades about 0.01 of its potential returns per unit of risk. America Movil SAB is currently generating about -0.05 per unit of risk. If you would invest 149.00 in Airtel Africa Plc on September 1, 2024 and sell it today you would lose (24.00) from holding Airtel Africa Plc or give up 16.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airtel Africa Plc vs. America Movil SAB
Performance |
| Timeline |
| Airtel Africa Plc |
| America Movil SAB |
Airtel Africa and America Movil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airtel Africa and America Movil
The main advantage of trading using opposite Airtel Africa and America Movil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airtel Africa position performs unexpectedly, America Movil 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 America Movil will offset losses from the drop in America Movil's long position.| Airtel Africa vs. BCE Inc | Airtel Africa vs. Axiologix | Airtel Africa vs. Advanced Info Service | Airtel Africa vs. American Nortel Communications |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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