Correlation Between Aeorema Communications and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and Telenor ASA 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 Aeorema Communications and Telenor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and Telenor ASA, you can compare the effects of market volatilities on Aeorema Communications and Telenor ASA 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 Aeorema Communications with a short position of Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Telenor ASA.
Diversification Opportunities for Aeorema Communications and Telenor ASA
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aeorema and Telenor is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA and Aeorema Communications 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 Aeorema Communications Plc are associated (or correlated) with Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Telenor ASA go up and down completely randomly.
Pair Corralation between Aeorema Communications and Telenor ASA
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the Telenor ASA. In addition to that, Aeorema Communications is 1.04 times more volatile than Telenor ASA. It trades about -0.09 of its total potential returns per unit of risk. Telenor ASA is currently generating about 0.03 per unit of volatility. If you would invest 12,831 in Telenor ASA on September 2, 2024 and sell it today you would earn a total of 254.00 from holding Telenor ASA or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Telenor ASA
Performance |
| Timeline |
| Aeorema Communications |
| Telenor ASA |
Aeorema Communications and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Telenor ASA
The main advantage of trading using opposite Aeorema Communications and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, Telenor ASA 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications vs. Toyota Motor Corp |
| Telenor ASA vs. Uniper SE | Telenor ASA vs. Mulberry Group PLC | Telenor ASA vs. London Security Plc | Telenor ASA vs. Triad Group PLC |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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