Correlation Between Koninklijke KPN and Nippon Telegraph
Can any of the company-specific risk be diversified away by investing in both Koninklijke KPN and Nippon Telegraph 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 Koninklijke KPN and Nippon Telegraph into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke KPN NV and Nippon Telegraph Telephone, you can compare the effects of market volatilities on Koninklijke KPN and Nippon Telegraph 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 Koninklijke KPN with a short position of Nippon Telegraph. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke KPN and Nippon Telegraph.
Diversification Opportunities for Koninklijke KPN and Nippon Telegraph
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Koninklijke and Nippon is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke KPN NV and Nippon Telegraph Telephone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Telegraph Tel and Koninklijke KPN 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 Koninklijke KPN NV are associated (or correlated) with Nippon Telegraph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Telegraph Tel has no effect on the direction of Koninklijke KPN i.e., Koninklijke KPN and Nippon Telegraph go up and down completely randomly.
Pair Corralation between Koninklijke KPN and Nippon Telegraph
If you would invest 93.00 in Nippon Telegraph Telephone on August 25, 2024 and sell it today you would earn a total of 7.00 from holding Nippon Telegraph Telephone or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Koninklijke KPN NV vs. Nippon Telegraph Telephone
Performance |
| Timeline |
| Koninklijke KPN NV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nippon Telegraph Tel |
Koninklijke KPN and Nippon Telegraph Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke KPN and Nippon Telegraph
The main advantage of trading using opposite Koninklijke KPN and Nippon Telegraph positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke KPN position performs unexpectedly, Nippon Telegraph 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 Nippon Telegraph will offset losses from the drop in Nippon Telegraph's long position.| Koninklijke KPN vs. Pegasus Tel | Koninklijke KPN vs. SwissCom AG | Koninklijke KPN vs. Hellenic Telecommunications Org | Koninklijke KPN vs. KonaTel |
| Nippon Telegraph vs. Vodafone Group PLC | Nippon Telegraph vs. KDDI Corp | Nippon Telegraph vs. Amrica Mvil, SAB | Nippon Telegraph vs. Singapore Telecommunications Limited |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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