Correlation Between MTN Group and SwissCom
Can any of the company-specific risk be diversified away by investing in both MTN Group and SwissCom 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 MTN Group and SwissCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTN Group Ltd and SwissCom AG, you can compare the effects of market volatilities on MTN Group and SwissCom 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 MTN Group with a short position of SwissCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTN Group and SwissCom.
Diversification Opportunities for MTN Group and SwissCom
Very poor diversification
The 3 months correlation between MTN and SwissCom is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding MTN Group Ltd and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG and MTN Group 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 MTN Group Ltd are associated (or correlated) with SwissCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SwissCom AG has no effect on the direction of MTN Group i.e., MTN Group and SwissCom go up and down completely randomly.
Pair Corralation between MTN Group and SwissCom
Assuming the 90 days horizon MTN Group Ltd is expected to under-perform the SwissCom. In addition to that, MTN Group is 1.47 times more volatile than SwissCom AG. It trades about -0.21 of its total potential returns per unit of risk. SwissCom AG is currently generating about -0.23 per unit of volatility. If you would invest 6,137 in SwissCom AG on September 1, 2024 and sell it today you would lose (366.00) from holding SwissCom AG or give up 5.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
MTN Group Ltd vs. SwissCom AG
Performance |
| Timeline |
| MTN Group |
| SwissCom AG |
MTN Group and SwissCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTN Group and SwissCom
The main advantage of trading using opposite MTN Group and SwissCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTN Group position performs unexpectedly, SwissCom 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 SwissCom will offset losses from the drop in SwissCom's long position.| MTN Group vs. XL Axiata Tbk | MTN Group vs. Telenor ASA ADR | MTN Group vs. KT Corporation | MTN Group vs. Vodacom Group Ltd |
| SwissCom vs. Telecom Argentina SA | SwissCom vs. Rogers Communications | SwissCom vs. Magyar Telekom Plc | SwissCom vs. Hellenic Telecommunications Org |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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