Correlation Between Magyar Telekom and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both Magyar Telekom and Telecom Argentina 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 Telecom Argentina 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 Telecom Argentina SA, you can compare the effects of market volatilities on Magyar Telekom and Telecom Argentina 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 Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magyar Telekom and Telecom Argentina.
Diversification Opportunities for Magyar Telekom and Telecom Argentina
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Magyar and Telecom is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Magyar Telekom Plc and Telecom Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina 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 Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of Magyar Telekom i.e., Magyar Telekom and Telecom Argentina go up and down completely randomly.
Pair Corralation between Magyar Telekom and Telecom Argentina
Assuming the 90 days horizon Magyar Telekom is expected to generate 5.26 times less return on investment than Telecom Argentina. But when comparing it to its historical volatility, Magyar Telekom Plc is 2.18 times less risky than Telecom Argentina. It trades about 0.17 of its potential returns per unit of risk. Telecom Argentina SA is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 954.00 in Telecom Argentina SA on September 3, 2024 and sell it today you would earn a total of 402.00 from holding Telecom Argentina SA or generate 42.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magyar Telekom Plc vs. Telecom Argentina SA
Performance |
| Timeline |
| Magyar Telekom Plc |
| Telecom Argentina |
Magyar Telekom and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magyar Telekom and Telecom Argentina
The main advantage of trading using opposite Magyar Telekom and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magyar Telekom position performs unexpectedly, Telecom Argentina 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 Telecom Argentina will offset losses from the drop in Telecom Argentina's long position.| Magyar Telekom vs. Telefonica Brasil SA | Magyar Telekom vs. Vodafone Group PLC | Magyar Telekom vs. Grupo Televisa SAB | Magyar Telekom vs. America Movil SAB |
| Telecom Argentina vs. Telefonica SA ADR | Telecom Argentina vs. Orange SA ADR | Telecom Argentina vs. SK Telecom Co | Telecom Argentina vs. America Movil SAB |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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