Correlation Between Cable One and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both Cable One and Airtel Africa 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 Cable One and Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and Airtel Africa Plc, you can compare the effects of market volatilities on Cable One and Airtel Africa 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 Cable One with a short position of Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Airtel Africa.
Diversification Opportunities for Cable One and Airtel Africa
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cable and Airtel is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc and Cable One 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 Cable One are associated (or correlated) with Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of Cable One i.e., Cable One and Airtel Africa go up and down completely randomly.
Pair Corralation between Cable One and Airtel Africa
Given the investment horizon of 90 days Cable One is expected to generate 1.12 times more return on investment than Airtel Africa. However, Cable One is 1.12 times more volatile than Airtel Africa Plc. It trades about 0.31 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about -0.19 per unit of risk. If you would invest 33,689 in Cable One on August 31, 2024 and sell it today you would earn a total of 8,268 from holding Cable One or generate 24.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cable One vs. Airtel Africa Plc
Performance |
| Timeline |
| Cable One |
| Airtel Africa Plc |
Cable One and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and Airtel Africa
The main advantage of trading using opposite Cable One and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa's long position.| Cable One vs. Liberty Broadband Srs | Cable One vs. Liberty Broadband Corp | Cable One vs. Telkom Indonesia Tbk | Cable One vs. Liberty Global PLC |
| Airtel Africa vs. Verizon Communications | Airtel Africa vs. ATT Inc | Airtel Africa vs. Comcast Corp | Airtel Africa vs. KDDI Corp |
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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