Correlation Between Airtel Africa and U S Cellular
Can any of the company-specific risk be diversified away by investing in both Airtel Africa and U S Cellular 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 U S Cellular 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 United States Cellular, you can compare the effects of market volatilities on Airtel Africa and U S Cellular 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 U S Cellular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airtel Africa and U S Cellular.
Diversification Opportunities for Airtel Africa and U S Cellular
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Airtel and USM is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Airtel Africa Plc and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular 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 U S Cellular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of Airtel Africa i.e., Airtel Africa and U S Cellular go up and down completely randomly.
Pair Corralation between Airtel Africa and U S Cellular
Assuming the 90 days horizon Airtel Africa Plc is expected to under-perform the U S Cellular. In addition to that, Airtel Africa is 1.6 times more volatile than United States Cellular. It trades about -0.05 of its total potential returns per unit of risk. United States Cellular is currently generating about 0.1 per unit of volatility. If you would invest 5,658 in United States Cellular on August 28, 2024 and sell it today you would earn a total of 842.00 from holding United States Cellular or generate 14.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airtel Africa Plc vs. United States Cellular
Performance |
| Timeline |
| Airtel Africa Plc |
| United States Cellular |
Airtel Africa and U S Cellular Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airtel Africa and U S Cellular
The main advantage of trading using opposite Airtel Africa and U S Cellular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airtel Africa position performs unexpectedly, U S Cellular 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 U S Cellular will offset losses from the drop in U S Cellular's long position.| Airtel Africa vs. BCE Inc | Airtel Africa vs. Axiologix | Airtel Africa vs. Advanced Info Service | Airtel Africa vs. American Nortel Communications |
| U S Cellular vs. Telephone and Data | U S Cellular vs. Vodafone Group PLC | U S Cellular vs. Lumen Technologies | U S Cellular vs. Altice USA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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