Correlation Between Deutsche Telekom and DigiCom Berhad

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom and DigiCom Berhad 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 DigiCom Berhad 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 DigiCom Berhad, you can compare the effects of market volatilities on Deutsche Telekom and DigiCom Berhad 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 DigiCom Berhad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and DigiCom Berhad.

Diversification Opportunities for Deutsche Telekom and DigiCom Berhad

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Deutsche and DigiCom is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and DigiCom Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiCom Berhad 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 DigiCom Berhad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiCom Berhad has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and DigiCom Berhad go up and down completely randomly.

Pair Corralation between Deutsche Telekom and DigiCom Berhad

Assuming the 90 days horizon Deutsche Telekom AG is expected to generate 2.36 times more return on investment than DigiCom Berhad. However, Deutsche Telekom is 2.36 times more volatile than DigiCom Berhad. It trades about 0.07 of its potential returns per unit of risk. DigiCom Berhad is currently generating about 0.12 per unit of risk. If you would invest  1,966  in Deutsche Telekom AG on August 30, 2024 and sell it today you would earn a total of  227.00  from holding Deutsche Telekom AG or generate 11.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy94.16%
ValuesDaily Returns

Deutsche Telekom AG  vs.  DigiCom Berhad

 Performance 
       Timeline  
Deutsche Telekom 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Deutsche Telekom AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Deutsche Telekom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
DigiCom Berhad 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DigiCom Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, DigiCom Berhad is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Deutsche Telekom and DigiCom Berhad Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Deutsche Telekom and DigiCom Berhad

The main advantage of trading using opposite Deutsche Telekom and DigiCom Berhad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom position performs unexpectedly, DigiCom Berhad 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 DigiCom Berhad will offset losses from the drop in DigiCom Berhad's long position.
The idea behind Deutsche Telekom AG and DigiCom Berhad pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

Other Complementary Tools

ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities