Correlation Between Magyar Telekom and SwissCom
Can any of the company-specific risk be diversified away by investing in both Magyar Telekom 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 Magyar Telekom and SwissCom 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 SwissCom AG, you can compare the effects of market volatilities on Magyar Telekom 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 Magyar Telekom with a short position of SwissCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magyar Telekom and SwissCom.
Diversification Opportunities for Magyar Telekom and SwissCom
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Magyar and SwissCom is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Telekom Plc and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG 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 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 Magyar Telekom i.e., Magyar Telekom and SwissCom go up and down completely randomly.
Pair Corralation between Magyar Telekom and SwissCom
Assuming the 90 days horizon Magyar Telekom Plc is expected to generate 1.25 times more return on investment than SwissCom. However, Magyar Telekom is 1.25 times more volatile than SwissCom AG. It trades about 0.13 of its potential returns per unit of risk. SwissCom AG is currently generating about -0.38 per unit of risk. If you would invest 1,443 in Magyar Telekom Plc on August 25, 2024 and sell it today you would earn a total of 72.00 from holding Magyar Telekom Plc or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magyar Telekom Plc vs. SwissCom AG
Performance |
| Timeline |
| Magyar Telekom Plc |
| SwissCom AG |
Magyar Telekom and SwissCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magyar Telekom and SwissCom
The main advantage of trading using opposite Magyar Telekom and SwissCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magyar Telekom 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.| Magyar Telekom vs. HUMANA INC | Magyar Telekom vs. SCOR PK | Magyar Telekom vs. Aquagold International | Magyar Telekom vs. Barloworld Ltd ADR |
| SwissCom vs. HUMANA INC | SwissCom vs. SCOR PK | SwissCom vs. Aquagold International | SwissCom 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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