Correlation Between London Security and Cellnex Telecom
Can any of the company-specific risk be diversified away by investing in both London Security and Cellnex Telecom 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 London Security and Cellnex Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Cellnex Telecom SA, you can compare the effects of market volatilities on London Security and Cellnex Telecom 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 London Security with a short position of Cellnex Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Cellnex Telecom.
Diversification Opportunities for London Security and Cellnex Telecom
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between London and Cellnex is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and Cellnex Telecom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellnex Telecom SA and London Security 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 London Security Plc are associated (or correlated) with Cellnex Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellnex Telecom SA has no effect on the direction of London Security i.e., London Security and Cellnex Telecom go up and down completely randomly.
Pair Corralation between London Security and Cellnex Telecom
Assuming the 90 days trading horizon London Security Plc is expected to generate 0.91 times more return on investment than Cellnex Telecom. However, London Security Plc is 1.09 times less risky than Cellnex Telecom. It trades about 0.04 of its potential returns per unit of risk. Cellnex Telecom SA is currently generating about 0.0 per unit of risk. If you would invest 263,649 in London Security Plc on September 23, 2024 and sell it today you would earn a total of 76,351 from holding London Security Plc or generate 28.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
London Security Plc vs. Cellnex Telecom SA
Performance |
| Timeline |
| London Security Plc |
| Cellnex Telecom SA |
London Security and Cellnex Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Cellnex Telecom
The main advantage of trading using opposite London Security and Cellnex Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security position performs unexpectedly, Cellnex Telecom 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 Cellnex Telecom will offset losses from the drop in Cellnex Telecom's long position.| London Security vs. Samsung Electronics Co | London Security vs. Samsung Electronics Co | London Security vs. Hyundai Motor | London Security vs. Toyota Motor Corp |
| Cellnex Telecom vs. Uniper SE | Cellnex Telecom vs. Mulberry Group PLC | Cellnex Telecom vs. London Security Plc | Cellnex Telecom vs. Triad Group PLC |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |