Correlation Between Koninklijke KPN and T-Mobile
Can any of the company-specific risk be diversified away by investing in both Koninklijke KPN and T-Mobile 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 T-Mobile 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 T Mobile, you can compare the effects of market volatilities on Koninklijke KPN and T-Mobile 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 T-Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke KPN and T-Mobile.
Diversification Opportunities for Koninklijke KPN and T-Mobile
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Koninklijke and T-Mobile is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke KPN NV and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 T-Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of Koninklijke KPN i.e., Koninklijke KPN and T-Mobile go up and down completely randomly.
Pair Corralation between Koninklijke KPN and T-Mobile
Assuming the 90 days horizon Koninklijke KPN is expected to generate 11.93 times less return on investment than T-Mobile. But when comparing it to its historical volatility, Koninklijke KPN NV is 2.26 times less risky than T-Mobile. It trades about 0.08 of its potential returns per unit of risk. T Mobile is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 20,428 in T Mobile on September 4, 2024 and sell it today you would earn a total of 2,782 from holding T Mobile or generate 13.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Koninklijke KPN NV vs. T Mobile
Performance |
| Timeline |
| Koninklijke KPN NV |
| T Mobile |
Koninklijke KPN and T-Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke KPN and T-Mobile
The main advantage of trading using opposite Koninklijke KPN and T-Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke KPN position performs unexpectedly, T-Mobile 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 T-Mobile will offset losses from the drop in T-Mobile's long position.| Koninklijke KPN vs. Nordic Semiconductor ASA | Koninklijke KPN vs. NXP Semiconductors NV | Koninklijke KPN vs. Hyatt Hotels | Koninklijke KPN vs. NH HOTEL GROUP |
| T-Mobile vs. Adtalem Global Education | T-Mobile vs. TAL Education Group | T-Mobile vs. COMPUTERSHARE | T-Mobile vs. Citic Telecom International |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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