Correlation Between Airtel Africa and Telia Company
Can any of the company-specific risk be diversified away by investing in both Airtel Africa and Telia Company 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 Telia Company 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 Telia Company AB, you can compare the effects of market volatilities on Airtel Africa and Telia Company 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 Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airtel Africa and Telia Company.
Diversification Opportunities for Airtel Africa and Telia Company
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Airtel and Telia is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Airtel Africa Plc and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company 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 Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of Airtel Africa i.e., Airtel Africa and Telia Company go up and down completely randomly.
Pair Corralation between Airtel Africa and Telia Company
If you would invest 147.00 in Airtel Africa Plc on November 5, 2024 and sell it today you would earn a total of 34.00 from holding Airtel Africa Plc or generate 23.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.26% |
| Values | Daily Returns |
Airtel Africa Plc vs. Telia Company AB
Performance |
| Timeline |
| Airtel Africa Plc |
| Telia Company |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Airtel Africa and Telia Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airtel Africa and Telia Company
The main advantage of trading using opposite Airtel Africa and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airtel Africa position performs unexpectedly, Telia Company 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 Telia Company will offset losses from the drop in Telia Company'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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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