Correlation Between Mitsubishi UFJ and Magyar Telekom
Can any of the company-specific risk be diversified away by investing in both Mitsubishi UFJ 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 Mitsubishi UFJ and Magyar Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi UFJ Financial and Magyar Telekom Plc, you can compare the effects of market volatilities on Mitsubishi UFJ 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 Mitsubishi UFJ with a short position of Magyar Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi UFJ and Magyar Telekom.
Diversification Opportunities for Mitsubishi UFJ and Magyar Telekom
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mitsubishi and Magyar is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Financial 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 Mitsubishi UFJ 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 Mitsubishi UFJ Financial 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 Mitsubishi UFJ i.e., Mitsubishi UFJ and Magyar Telekom go up and down completely randomly.
Pair Corralation between Mitsubishi UFJ and Magyar Telekom
Given the investment horizon of 90 days Mitsubishi UFJ is expected to generate 1.75 times less return on investment than Magyar Telekom. But when comparing it to its historical volatility, Mitsubishi UFJ Financial is 1.2 times less risky than Magyar Telekom. It trades about 0.08 of its potential returns per unit of risk. Magyar Telekom Plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 833.00 in Magyar Telekom Plc on August 25, 2024 and sell it today you would earn a total of 682.00 from holding Magyar Telekom Plc or generate 81.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi UFJ Financial vs. Magyar Telekom Plc
Performance |
| Timeline |
| Mitsubishi UFJ Financial |
| Magyar Telekom Plc |
Mitsubishi UFJ and Magyar Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi UFJ and Magyar Telekom
The main advantage of trading using opposite Mitsubishi UFJ and Magyar Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi UFJ 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.| Mitsubishi UFJ vs. Sumitomo Mitsui Financial | Mitsubishi UFJ vs. Mizuho Financial Group | Mitsubishi UFJ vs. Nomura Holdings ADR | Mitsubishi UFJ vs. Natwest Group PLC |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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