Correlation Between Japan Post and Magyar Telekom
Can any of the company-specific risk be diversified away by investing in both Japan Post 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 Japan Post and Magyar Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Post Holdings and Magyar Telekom Plc, you can compare the effects of market volatilities on Japan Post 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 Japan Post with a short position of Magyar Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and Magyar Telekom.
Diversification Opportunities for Japan Post and Magyar Telekom
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Japan and Magyar is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Holdings 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 Japan Post 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 Japan Post Holdings 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 Japan Post i.e., Japan Post and Magyar Telekom go up and down completely randomly.
Pair Corralation between Japan Post and Magyar Telekom
Assuming the 90 days horizon Japan Post Holdings is expected to under-perform the Magyar Telekom. In addition to that, Japan Post is 26.91 times more volatile than Magyar Telekom Plc. It trades about -0.12 of its total potential returns per unit of risk. Magyar Telekom Plc is currently generating about 0.13 per unit of volatility. If you would invest 371.00 in Magyar Telekom Plc on August 25, 2024 and sell it today you would earn a total of 1,144 from holding Magyar Telekom Plc or generate 308.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 35.96% |
| Values | Daily Returns |
Japan Post Holdings vs. Magyar Telekom Plc
Performance |
| Timeline |
| Japan Post Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Magyar Telekom Plc |
Japan Post and Magyar Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and Magyar Telekom
The main advantage of trading using opposite Japan Post and Magyar Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post 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.| Japan Post vs. Huntington Bancshares Incorporated | Japan Post vs. Fifth Third Bancorp | Japan Post vs. MT Bank | Japan Post vs. Citizens Financial Group, |
| Magyar Telekom vs. HUMANA INC | Magyar Telekom vs. SCOR PK | Magyar Telekom vs. Aquagold International | Magyar Telekom vs. Barloworld Ltd ADR |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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