Correlation Between Airtel Africa and SoftBank Group
Can any of the company-specific risk be diversified away by investing in both Airtel Africa and SoftBank Group 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 SoftBank Group 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 SoftBank Group Corp, you can compare the effects of market volatilities on Airtel Africa and SoftBank Group 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 SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airtel Africa and SoftBank Group.
Diversification Opportunities for Airtel Africa and SoftBank Group
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Airtel and SoftBank is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Airtel Africa Plc and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp 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 SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of Airtel Africa i.e., Airtel Africa and SoftBank Group go up and down completely randomly.
Pair Corralation between Airtel Africa and SoftBank Group
Assuming the 90 days horizon Airtel Africa Plc is expected to under-perform the SoftBank Group. In addition to that, Airtel Africa is 1.8 times more volatile than SoftBank Group Corp. It trades about -0.02 of its total potential returns per unit of risk. SoftBank Group Corp is currently generating about 0.01 per unit of volatility. If you would invest 2,892 in SoftBank Group Corp on August 29, 2024 and sell it today you would lose (14.00) from holding SoftBank Group Corp or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airtel Africa Plc vs. SoftBank Group Corp
Performance |
| Timeline |
| Airtel Africa Plc |
| SoftBank Group Corp |
Airtel Africa and SoftBank Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airtel Africa and SoftBank Group
The main advantage of trading using opposite Airtel Africa and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airtel Africa position performs unexpectedly, SoftBank Group 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.| Airtel Africa vs. BCE Inc | Airtel Africa vs. Axiologix | Airtel Africa vs. Advanced Info Service | Airtel Africa vs. American Nortel Communications |
| SoftBank Group vs. Airtel Africa Plc | SoftBank Group vs. Vodafone Group PLC | SoftBank Group vs. United States Cellular | SoftBank Group vs. Telefonica SA ADR |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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