Correlation Between IDT and Magyar Telekom
Can any of the company-specific risk be diversified away by investing in both IDT 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 IDT and Magyar Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDT Corporation and Magyar Telekom Plc, you can compare the effects of market volatilities on IDT 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 IDT with a short position of Magyar Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDT and Magyar Telekom.
Diversification Opportunities for IDT and Magyar Telekom
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IDT and Magyar is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding IDT Corp. 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 IDT 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 IDT Corporation 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 IDT i.e., IDT and Magyar Telekom go up and down completely randomly.
Pair Corralation between IDT and Magyar Telekom
Considering the 90-day investment horizon IDT is expected to generate 1.64 times less return on investment than Magyar Telekom. In addition to that, IDT is 1.22 times more volatile than Magyar Telekom Plc. It trades about 0.07 of its total potential returns per unit of risk. Magyar Telekom Plc is currently generating about 0.14 per unit of volatility. If you would invest 1,014 in Magyar Telekom Plc on November 3, 2024 and sell it today you would earn a total of 732.00 from holding Magyar Telekom Plc or generate 72.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDT Corp. vs. Magyar Telekom Plc
Performance |
| Timeline |
| IDT Corporation |
| Magyar Telekom Plc |
IDT and Magyar Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDT and Magyar Telekom
The main advantage of trading using opposite IDT and Magyar Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDT 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.The idea behind IDT Corporation and Magyar Telekom Plc 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.| Magyar Telekom vs. SwissCom AG | Magyar Telekom vs. Hellenic Telecommunications Org | Magyar Telekom vs. Telefonica SA ADR | Magyar Telekom vs. Lumen Technologies |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
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| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |