Correlation Between Deutsche Telekom and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom 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 Deutsche Telekom and Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Telekom AG and Airtel Africa Plc, you can compare the effects of market volatilities on Deutsche Telekom 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 Deutsche Telekom with a short position of Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and Airtel Africa.
Diversification Opportunities for Deutsche Telekom and Airtel Africa
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Deutsche and Airtel is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG 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 Deutsche Telekom 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 Deutsche Telekom AG 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 Deutsche Telekom i.e., Deutsche Telekom and Airtel Africa go up and down completely randomly.
Pair Corralation between Deutsche Telekom and Airtel Africa
Assuming the 90 days horizon Deutsche Telekom AG is expected to generate 0.48 times more return on investment than Airtel Africa. However, Deutsche Telekom AG is 2.09 times less risky than Airtel Africa. It trades about 0.13 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about -0.12 per unit of risk. If you would invest 2,990 in Deutsche Telekom AG on August 29, 2024 and sell it today you would earn a total of 177.00 from holding Deutsche Telekom AG or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Deutsche Telekom AG vs. Airtel Africa Plc
Performance |
| Timeline |
| Deutsche Telekom |
| Airtel Africa Plc |
Deutsche Telekom and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Telekom and Airtel Africa
The main advantage of trading using opposite Deutsche Telekom and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom 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.| Deutsche Telekom vs. Verizon Communications | Deutsche Telekom vs. ATT Inc | Deutsche Telekom vs. Pharvaris BV | Deutsche Telekom vs. Direxion Daily FTSE |
| Airtel Africa vs. BCE Inc | Airtel Africa vs. Axiologix | Airtel Africa vs. Advanced Info Service | Airtel Africa vs. American Nortel Communications |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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