Correlation Between Magyar Telekom and XL Axiata
Can any of the company-specific risk be diversified away by investing in both Magyar Telekom and XL Axiata 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 Magyar Telekom and XL Axiata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magyar Telekom Plc and XL Axiata Tbk, you can compare the effects of market volatilities on Magyar Telekom and XL Axiata 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 Magyar Telekom with a short position of XL Axiata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magyar Telekom and XL Axiata.
Diversification Opportunities for Magyar Telekom and XL Axiata
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Magyar and PTXKY is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Telekom Plc and XL Axiata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Axiata Tbk and Magyar Telekom 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 Magyar Telekom Plc are associated (or correlated) with XL Axiata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Axiata Tbk has no effect on the direction of Magyar Telekom i.e., Magyar Telekom and XL Axiata go up and down completely randomly.
Pair Corralation between Magyar Telekom and XL Axiata
Assuming the 90 days horizon Magyar Telekom Plc is expected to generate 0.43 times more return on investment than XL Axiata. However, Magyar Telekom Plc is 2.32 times less risky than XL Axiata. It trades about 0.12 of its potential returns per unit of risk. XL Axiata Tbk is currently generating about -0.09 per unit of risk. If you would invest 1,502 in Magyar Telekom Plc on September 1, 2024 and sell it today you would earn a total of 72.00 from holding Magyar Telekom Plc or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Magyar Telekom Plc vs. XL Axiata Tbk
Performance |
| Timeline |
| Magyar Telekom Plc |
| XL Axiata Tbk |
Magyar Telekom and XL Axiata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magyar Telekom and XL Axiata
The main advantage of trading using opposite Magyar Telekom and XL Axiata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magyar Telekom position performs unexpectedly, XL Axiata 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 XL Axiata will offset losses from the drop in XL Axiata's long position.| Magyar Telekom vs. HUMANA INC | Magyar Telekom vs. Aquagold International | Magyar Telekom vs. Barloworld Ltd ADR | Magyar Telekom vs. Thrivent High Yield |
| XL Axiata vs. MTN Group Ltd | XL Axiata vs. Vodacom Group Ltd | XL Axiata vs. Telenor ASA ADR | XL Axiata vs. KT Corporation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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