Correlation Between BASF SE and Magyar Telekom
Can any of the company-specific risk be diversified away by investing in both BASF SE and Magyar Telekom 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 BASF SE and Magyar Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASF SE and Magyar Telekom PLC, you can compare the effects of market volatilities on BASF SE and Magyar Telekom 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 BASF SE with a short position of Magyar Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and Magyar Telekom.
Diversification Opportunities for BASF SE and Magyar Telekom
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BASF and Magyar is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE and Magyar Telekom PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Telekom PLC and BASF SE 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 BASF SE are associated (or correlated) with Magyar Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Telekom PLC has no effect on the direction of BASF SE i.e., BASF SE and Magyar Telekom go up and down completely randomly.
Pair Corralation between BASF SE and Magyar Telekom
Assuming the 90 days trading horizon BASF SE is expected to generate 2.03 times more return on investment than Magyar Telekom. However, BASF SE is 2.03 times more volatile than Magyar Telekom PLC. It trades about 0.56 of its potential returns per unit of risk. Magyar Telekom PLC is currently generating about 0.32 per unit of risk. If you would invest 1,718,000 in BASF SE on September 18, 2024 and sell it today you would earn a total of 146,400 from holding BASF SE or generate 8.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 36.36% |
| Values | Daily Returns |
BASF SE vs. Magyar Telekom PLC
Performance |
| Timeline |
| BASF SE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Magyar Telekom PLC |
BASF SE and Magyar Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and Magyar Telekom
The main advantage of trading using opposite BASF SE and Magyar Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, Magyar Telekom 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 Magyar Telekom will offset losses from the drop in Magyar Telekom's long position.| BASF SE vs. OTP Bank Nyrt | BASF SE vs. MOL Nyrt | BASF SE vs. OPUS GLOBAL Nyrt | BASF SE vs. ALTEO Energiaszolgaltato Nyrt |
| Magyar Telekom vs. OTP Bank Nyrt | Magyar Telekom vs. MOL Nyrt | Magyar Telekom vs. OPUS GLOBAL Nyrt | Magyar Telekom vs. ALTEO Energiaszolgaltato Nyrt |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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